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Cablegate: Daily Summary of Japanese Press 10/16/08

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PP RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #2879/01 2900814
ZNR UUUUU ZZH
P 160814Z OCT 08
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC PRIORITY 7972
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 2752
RUEHFK/AMCONSUL FUKUOKA 0399
RUEHOK/AMCONSUL OSAKA KOBE 4145
RUEHNAG/AMCONSUL NAGOYA 8466
RUEHKSO/AMCONSUL SAPPORO 0972
RUEHBJ/AMEMBASSY BEIJING 5855
RUEHUL/AMEMBASSY SEOUL 1855
RUCNDT/USMISSION USUN NEW YORK 2112

UNCLAS SECTION 01 OF 08 TOKYO 002879

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 10/16/08

INDEX:

(1) South Korea learned of delisting of North Korea from U.S. the
day before Japan received report (Asahi)

(2) Former Prime Minister Abe: Japan should not toss away its
sanction card against North Korea (Yomiuri)

(3) PAC-3 live-fire test successful, but Nodong missiles beyond
scope of assumption (Tokyo Shimbun)

(4) Spillover of financial crisis into real economy: Export-oriented
companies' business performance worsening (Nikkei)

(5) TOP HEADLINES

(6) EDITORIALS

(7) Prime Minister's schedule, October 15 (Nikkei)

ARTICLES:

(1) South Korea learned of delisting of North Korea from U.S. the
day before Japan received report

ASAHI (Page 4) (Abridged slightly)
October 15, 2008

The U.S. removal of North Korea from its list of
terrorism-sponsoring nations has taken the Japanese government by
surprise. It has also shaken Japan's trust in the United States, its
ally, and has exposed the government's insufficient ability to
analyze information.

On the night of Oct. 11, the U.S. media reported that Washington
would announce the delisting of North Korea in just several hours.
But Foreign Ministry officials all denied such a development, with
one saying, "The report is groundless," and another commenting, "If
the North was delisted today, that means we were deceived."

Tokyo had expected that sooner or later, Washington would delist the
North. Tokyo was also certain that Washington would dutifully inform
the Japanese government before making a final decision.

But according to a U.S. State Department press conference, President
George W. Bush decided on the delisting on the afternoon of Oct. 10,
local time. It was immediately after Foreign Minister Hirofumi
Nakasone conveyed Japan's position to Secretary of State Condoleezza
Rice on the phone, saying, "There still remain some points that need
to be confirmed."

Time went by without any report from the United States, and a senior
Foreign Ministry official commented on the night of Oct. 11: "The
President has not made a final decision." Foreign Minister Nakasone
stayed at home that night assuming that the delisting would not
occur before the end of the day.

Meanwhile, a senior South Korean official revealed on Oct. 14 that
the ROK Presidential Office had been informed of the delisting by
the United States on the night of Oct. 10.

According to the South Korean official, U.S. Assistant Secretary of

TOKYO 00002879 002 OF 008


State Christopher Hill, upon winding up his trip to North Korea on
Oct. 3, briefed South Korean government officials and others in
Seoul on the results of his trip. The official also quoted Hill as
saying in the briefing: "Because I did not plan to brief the
Japanese government, (Asian and Oceanian Affairs Bureau
Director-General Akitaka Saiki) came (to Seoul) from Japan."

U.S. newspapers reported that Japan's stern posture on the
verification of North Korea nuclear programs delayed the delisting.
There is a possibility that some U.S. government forces that aim to
get the Six-Party Talks back on track by the Nov. 4 U.S.
presidential election tried to contain Japan's objection by cutting
off information.

Japan has been left completely out of the loop. Even so, Chief
Cabinet Secretary Takeo Kawamura in a press conference on Oct. 14
desperately tried to deny speculation about discord between Japan
and the United States, saying: "I think a final decision (on the
delisting) was supposed to be made between the President and the
Prime Minister. It is not true that there was a lack of close
cooperation between Japan and the United States."

A prime ministerial aide noted: "It was like a bat and a ball being
thrown at the batter in the box before he was ready for them. In
such a situation, the umpire usually calls time, but that did not
happen."

President Bush, who seemed to have a deep understanding of the
abduction issue and a severer view toward the North than those of
Secretary Rice and Assistant Secretary Hill, had been expected to
stop the delisting. The aide's comment reflected his disappointment
with President Bush.

Another prime ministerial aide said self-mockingly: "Witnessing such
a development, I feel that Japanese diplomacy is not that great. I
cannot believe it." A former cabinet minister of the Liberal
Democratic Party criticized the foreign minister's response, saying:
"When he had a long (telephone) conversation with Secretary Rice,
Foreign Minister Nakasone believed that he was able to reject (the
delisting). Things are not that easy."

Aso modifies his stance into "dissatisfaction with delisting"

In an Upper House Budget Committee meeting on Oct. 14, Prime
Minister Aso said: "I have repeatedly said that I am dissatisfied
with the delisting." Asked about his view immediately after the
delisting took place, Aso had described the step as "one method."
The prime minister has now subtly shifted his stance.

Now that the "delisting card" is no longer available, Japan will
have to move its talks with the North forward with its own sanctions
and other means as the leverage.

In bilateral talks in August, Japan and North Korea agreed for Tokyo
to lift the ban on travel between the two countries and charter
flights from North Korea once Pyongyang set up a panel to
reinvestigate into the fate of Japanese abductees.

In the wake of the resignation of former Prime Minister Yasuo
Fukuda, the North has put off the establishment of the panel. Under
the new Aso administration, Japan has repeatedly asked for the start
of the reinvestigation, but there has been no response from the

TOKYO 00002879 003 OF 008


North.

The Six Parties have also agreed to complete providing energy aid to
the North by the end of October in return for the North's
disablement of its nuclear facilities at the Yongbyon nuclear
complex. There is a strong likelihood that the implementation
deadline will be put off. At the same time, other Six-Party members
are likely to apply pressure on Japan, which has not joined the aid
on the reason for the abduction issue.

Yesterday, Prime Minister Aso categorically told the Upper House
Budget Committee: "Japan will not join (energy aid) unless there is
progress on the abduction issue." Nevertheless, there is no denying
that the delisting has made the North less enthusiastic about
addressing the abduction issue. There is no guarantee that Japan
will not be pressed for prioritizing the nuclear issue over the
abduction issue.

(2) Former Prime Minister Abe: Japan should not toss away its
sanction card against North Korea

YOMIURI (Page 4) (Full)
October 16, 2008

It is regrettable that the U.S. government delisted North Korea as a
state sponsoring terrorism, although it had been expected. Although
the United States made that decision, it will not do to let the
relationship between Japan and the United States become sour as a
result. Tokyo and Washington should continue to cooperate closely so
as not to give Pyongyang any chance to (drive a wedge between the
two countries).

The agreement on verification procedures between the United States
and North Korea will probably lead to a temporary halt in
Pyongyang's nuclear programs. President George W. Bush appears to
have a strong desire to stop that country's nuclear development
programs before he leaves office.

However, the main purpose of the deal was supposed to make North
Korea abandon the development of plutonium. The agreement this time
around is but one step toward the North's complete abandonment of
its nuclear programs. It is necessary to verify what happened to the
extracted plutonium and nuclear weapons, as well as the nuclear
programs.

There has been no progress on the issue of North Korea's abductions
of Japanese nationals. I think it is good that Prime Minister Taro
Aso expressed Japan's concern to the United States in order to have
Washington and other countries involved know Japan's position.

Under the Fukuda administration, Japan and North Korea agreed that
the North would (reinvestigate the abductions) with an eye on
resolving the issue, but Pyongyang has yet to start. Unless both the
nuclear and abduction issues are resolved, Japan will not budge an
inch. North Korea will not take any action unless that message is
driven home. It is important for Japan to maintain a "dialogue and
pressure" policy of attaching special importance to pressure. If
Japan removes its sanction measures, North Korea will gain ground as
Japan will have the only the assistance card to play.

Japan should seek understanding for the abduction issue from the
next American government. The presidential election will be held

TOKYO 00002879 004 OF 008


next month. If (Republican presidential candidate) Sen. John McCain
is elected president, it will not necessary to explain the issue to
the (Republican) staff. If (Democratic presidential candidate) Sen.
Barack Obama is elected, Japan will need to explain its position
well. It is also necessary for Tokyo to work on Washington to
maintain its remaining sanctions against Pyongyang.

(3) PAC-3 live-fire test successful, but Nodong missiles beyond
scope of assumption

TOKYO SHIMBUN (Page 20) (Full)
October 13, 2008

The Air Self-Defense Force (ASDF) successfully shot down a mock
ballistic missile in Japan's first live-fire test of the land-based
Patriot Advanced Capabilit-3 (PAC-3) interceptor in New Mexico on
September 17. But uncertainty is still looming over its performance.
According to the U.S. non-governmental organization (NGO) that
developed the PAC-3, North Korea's Nodong-class missiles are not
envisioned as possible targets of counterattacks by the PAC-3.

In July 2006, North Korea conducted a test-fire in waters off
Russia, which prompted Japan to decide to deploy the PAC-3 system
ahead of schedule. As the target of counterattacks, Japan naturally
envisioned Nodong missiles with a (1,300-kilometer) range that
covers all of Japan, excluding some part of Hokkaido and Okinawa.

In this test, a surface-to-air PAC-2 missile was used as the target,
but this missile reportedly has a range of only about 100
kilometers. A missile with a shorter range comes down rapidly. This
means that although the test was conducted successfully, it is still
unknown whether the PAC-3 is capable of shooting down Nodong-class
missiles.

Motoaki Kamiura, a military journalist, said: "The Defense Ministry
has not disclosed information" about the details of the PAC-3's
performance.

But here is a hint. The Center for Defense Information (CDI), the
U.S. NGO that developed the PAC-3, put together data on experiments
of the interceptor into a report this April. The CDI is an
authoritative independent institute established in 1972 by
ex-servicemen. The report spells out 27 test cases conducted from
September in 1997 through July in 2007. The data show that 20 tests
using cruise, anti-radiation, and other kinds of missiles as the
target were conducted successfully.

The largest missile among those used as the target in the successful
cases was a Scud-class missile with a 600-kilometer range. It has
been revealed that Nodong-class missiles with a 1,300-kilometer
range are beyond the scope of the assumption.

In actual warfare, a PAC-3 interceptor successfully hit Ababile 100
missiles (with a range of 250-200 kilometers).

Hiromichi Umebayashi, president of the Peace Depot, a NPO
corporation, said angrily: "In North Korea, 200 Nodong-class
missiles reportedly have been deployed, but there is no data that
shows the PAC-3 is capable of shooting down such missiles. There is
no explanation by the government, either. Some quibble that there is
no evidence that the PAC-3 is unable to hit that class of
missiles."

TOKYO 00002879 005 OF 008

Kamiura commented: "A Nodong missile falls at mach 10. In terms of
speed, the PAC-3 is unable to hit it. In addition, it is known in
tests from where the missiles were launched. But Nodong missiles can
be carried by trailers, it is more difficult to hit them."

Despite such circumstances, why is Japan preparing to deploy the
PAC-3 system? Kamiura takes this view: "That is because of the
Japanese-version military-industrial complex. The PAC-3 missiles
manufactured by Mitsubishi Heavy Industries under license have been
deployed starting this fiscal year. The Japan-U.S. missile defense
(MD) system is a gold mine for the Japanese military industry."

The PAC-3 test in New Mexico cost about 2.5 billion yen that
includes service charges paid to the U.S. the Defense Ministry has
earmarked a total of 127.9 billion yen as MD system-related outlays
in its budgetary request for next fiscal year.

(4) Spillover of financial crisis into real economy: Export-oriented
companies' business performance worsening

NIKKEI (Page 1) (Full)
October 16, 2008

Business performances of export-oriented companies are increasingly
deteriorating as the financial crisis that started in the U.S.
spills over to affect the real economies of the world. The operating
profit of the Sony group for fiscal 2008 will most likely fall short
of expectations by more than 100 billion yen. The profit growth of
Komatsu is also expected to slow. More companies are expected to
make a downward revision to their business performance projections
in the run-up to the account settlement for the April-September
period to be released toward the end of this month.

The sluggish consumption in the U.S. is casting a pall over the
Christmas holiday selling season, the busiest season for
export-oriented companies. Sony had enjoyed relatively solid sales
of digital cameras and LCD televisions up until the April-June
quarter. However, its profits are now worsening due to the
increasingly downward trend of the prices of those mainstay products
since the summer, when the financial turmoil became serious.

The sales of new cars of Toyota Motors in the U.S. dropped 32
PERCENT in September. The sales of not only large cars but also
fuel-efficient compacts are in bad shape. Its group operating profit
is expected to drop 40 PERCENT , worse than the 30 PERCENT fall
originally projected.

In Europe, where the economy is slowing due to the spillover of the
financial crisis, construction of houses and commercial facilities
is in a slump. Komatsu had projected 360 billion yen in group
operating profits for the current term, up 8 PERCENT from the
preceding term. However, the growth will be no more than about 340
billion yen, a 2 PERCENT increase.

The strong-yen and weak-euro trend, which has advanced since August
because of the deteriorated European economies, is putting a dent in
companies' business performances. If the yen hovers at around 140 to
the euro in the second half of fiscal 2009, Komatsu will lose 7
billion yen in profits.

As the slowdown of consumption becomes clear, companies that ship

TOKYO 00002879 006 OF 008


electronic parts to plants in rapidly emerging economies, such as
China, are beginning to be affected. TDK is suffering from a sharp
decline in demand for home electronics and PCs. It had estimated
about a 50 PERCENT decline in the group's operating profit for the
April-September period this year, compared with the preceding year.
However, the decline appears to have expanded to 70 PERCENT . Its
group operating profit for the whole financial year will likely be
in the red for the first time since fiscal 2002.

Many export-oriented companies project improved performances for the
period after September. Even companies that revised projections for
their business performances for July and August suspended
projections for the second half of the financial year. However, amid
economic indicators, such as consumer spending in the U.S. and
employment statistics, worsening more than estimated,
export-oriented companies are urged to further revise down their
operating profit projections.

The high prices of crude oil and raw materials, a major factor in
the economic slowdown up until the summer, have taken a downward
turn. This is a factor that provides the underpinning for many
companies, such as steel companies. Since the downward trend
reflects a decline in global demand for such products, this is not
something companies can rejoice about unreservedly.

Listed companies had registered increased profits for six
consecutive quarters up to the previous one. There had been a
projection that their consolidated operating profits for this
quarter would slide 9 PERCENT . However, the scope of the decline
will likely reach a double-digit figure in further downward
revisions.

(5) TOP HEADLINES

Asahi:
Ruling coalition mulling use of reserves in special accounts for
fixed-sum tax cut

Mainichi:
Defense academy professor arrested on suspicion of taking bribes

Yomiuri:
Yomiuri recommends allocating doctors across nation under plan, as
part of medical reform

Nikkei:
European Central Bank to help stabilize European financial markets

Sankei:
Chinese beans found contaminated with pesticide; Moves afoot to
review procurement sources

Tokyo Shimbun:
Compressing facilities for unburnable garbage in six wards to be
disbanded due to improved disposal system

Akahata:
Abolish elderly health insurance system

(6) EDITORIALS

Asahi:

TOKYO 00002879 007 OF 008


(1) NHK should streamline itself in wake of reduction in TV viewing
fees
(2) Speed up moves to stabilize situation in Georgia

Mainichi:
(1) NHK management plan: There are more challenges to tackle besides
viewing fees
(2) Death of MSDF member: Apply scalpel to problems in organization

Yomiuri:
(1) It's time to dispel public concern about health care

Nikkei:
(1) With vacated post of vice governor, BOJ should step up efforts
in dealing with financial crisis
(2) Tainted frozen beans imported from China sparking concern

Sankei:
(1) U.S. should inject capital and purchase nonperforming loans in
package
(2) Japan, China must cooperate to quickly clear up cause of tainted
Chinese beans incident

Tokyo Shimbun:
(1) Understanding from generations still working needed for
reviewing elderly health plan
(2) Fully investigate tainted Chinese beans incident, based on
lessons from dumpling case

Akahata:
(1) Promptly abolish elderly health plan in response to criticism

(7) Prime Minister's schedule, October 15

NIKKEI (Page 2) (Full)
October 16, 2008

07:26
Met with Deputy Chief Cabinet Secretary Konoike.

09:01
Upper House Budget Committee meeting.

12:00
Met with LDP Ibaraki Prefectural Chapter Chairman Yamaguchi and
Deputy Secretary General Arai.

13:00
Upper House Budget Committee meeting.

17:30
Abduction Issue Countermeasures Headquarters meeting at the Kantei.

18:40
Reception for the World Cultural Award ceremony commemorating Prince
Takamatsu at Meiji Memorial Hall in Moto-Akasaka. Then dined with
his secretary at a Japanese restaurant in the Hall.

20:26
Dined with staff members of the Aso Office at a Japanese restaurant
in Hiroo.


TOKYO 00002879 008 OF 008


22:09
Arrived at his private residence in Kamiyama-cho.

SCHIEFFER

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