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Cablegate: Japanese Morning Press Highlights 12/09/08

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UNCLAS SECTION 01 OF 09 TOKYO 003339

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DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA;
WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST DIVISION;
TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS OFFICE;
SECDEF FOR JCS-J-5/JAPAN,
DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA
FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR;
CINCPAC FLT/PA/ COMNAVFORJAPAN/PA.

E.O. 12958: N/A
TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA

SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 12/09/08

Index:

Diplomatic agenda:
1) Gulf remains wide in Six-Party Talks with North Korea unwilling
to cooperate on documenting verification (Asahi)
2) Japan, U.S., ROK in trilateral meeting at the director-general
level agree to cooperate on Africa policy, including environmental
and energy fields (Nikkei)
3) Chinese vessels intrude into Japanese waters; Tokyo protests
(Nikkei)

4) Government asking for 80 - 100 billion yen allocation in defense
budget for USFJ realignment expenditures (Nikkei)

Political agenda:
5) Bank recapitalization bill to pass the Diet Dec. 12; Regular Diet
session will open Jan. 5 (Nikkei)
6) Feeling of impasse in the ruling party LDP, with some talking of
political realignment (Mainichi)
7) Now that Aso cabinet support rate is close to 20 PERCENT , the
opposition camp is toughening its Diet stance even more, some
talking of no-confidence motion (Yomiuri)
8) Bureaucrats, too, are distancing selves from Aso administration,
making it more difficult for the prime minister to place his policy
imprint on the budget (Yomiuri)

9) Government, ruling camp considering economic stimulus package of
20 trillion yen over three years, focused on environment, medical
care (Yomiuri)
10) Regional decentralization committee recommends cutting 34,600
central-government personnel posted locally, scrapping nine
organizations (Mainichi)

11) Former Prime Minister Nakasone hospitalized after fall at home
that breaks shoulder (Asahi)

Articles:

1) Six-party talks: Gap remains over codifying nuclear verification
protocol

ASAHI (Page 1) (Full)
December 9, 2008

Shinji Inada, Jun Okudera, Beijing

A six-party talks delegation heads meeting to discuss North Korea's
denuclearization began at the Diaoyutai State Guesthouse in Beijing
on the afternoon of Dec. 8. China, chair of the six-party talks, is
expected to present on Dec. 9 to the member countries a draft
agreement specifying verification methods and subjects of the
nuclear programs the North declared in June. The North has rejected
a call from Japan, the United States, and South Korea for putting
the sampling of nuclear-related materials into writing. The talks
that resumed after a lapse of five months are expected to run into
difficulties.

According to a six-party talks source, the session is slated to last
three days but it could be extended. Chances are that this is the
last six-party meeting for the Bush administration, which will step
down in January.


TOKYO 00003339 002 OF 009


According to U.S. chief delegate and Assistant Secretary of State
Christopher Hill, the members will discuss on the first day: (1) the
nuclear programs verification protocol, (2) economic and energy aid
to the North, and (3) the nuclear facilities disablement roadmap.
Japan's chief envoy and the Foreign Ministry's Asian and Oceanian
Affairs Bureau Director-General Akitaka Saiki said after the day's
session: "There is a large gap between North Korea and the other
five countries over how the programs should be verified."

A South Korean source indicated that a broad agreement has been
reached to complete by next March the second denuclearization phase
specifying energy aid in return for the disablement, conditioned on
codifying the verification protocol. The source also indicated that
in talks with the South, the North has agreed to transport to
overseas the unused fuel rods to be used for nuclear reactors in the
disablement process.

According to a Japan-ROK negotiations source, the North has
criticized Japan, which has not joined aid to the country due to the
abduction issue, saying that it does not recognize Japan as a member
of the talks. At the same time, the North has reportedly agreed to
receiving 200,000 tons of heavy fuel oil from Australia and other
non-member countries in place of Japan.

2) Japan, China, South Korea to cooperate on Africa policy: First
bureau-director-level talks to be held to discuss environment,
energy conservation

NIKKEI (Page 1) (Full)
Evening, December 8, 2008

Ken Sato, Beijing

Japan, China and South Korea will cooperate regarding their policies
toward Africa. They will hold their first policy talks to look into
a joint assistance project for measures on the environment, energy
conservation, and the prevention of desertification. Japan has thus
far frequently competed with China. However, it has changed that
policy to one of cooperation. Though there is a limit to the amount
of official development assistance (ODA) funds, the three countries
will aim to counter European countries and the U.S., which are
making a rapid approach to African countries with an eye on their
interests in natural resources.

The three countries will also confirm their policy cooperation at
the tripartite summit to be held in Fukuoka Prefecture on December
13. Talks on the 12th will be joined by Foreign Ministry bureau
directors. Deputy Foreign Minister Yoshitaka Akimoto will represent
Japan. Measures against infectious diseases, such as AIDS,
agricultural technology and the nurturing of human resources will
also be on the agenda.

Japan and China have pledged to double assistance to African
nations. Japan has pointed out problems with China's approach, such
as its assistance even to countries whose governing systems have
drawn criticism. However, it has become unable to compete with China
in terms of boosting the amount of assistance. With more than 40
PERCENT of its foreign assistance going to Africa, China is drawing
fire as a neocolonialist power. It intends to learn from Japan,
which has been pouring energy also in social assistance, attaching
importance to recipient countries' self-supporting efforts. South
Korea, which is lagging behind the two countries in terms of

TOKYO 00003339 003 OF 009


assistance to Africa, wants to explore measures to catch up with
them.

3) Two Chinese ships enter Japanese waters near Senkaku Islets;
Government files protest

NIKKEI (Page 2) (Abridged slightly)
December 9, 2008

The patrol boat Kunigami of the 11th Regional Japan Coast Guard
Headquarters spotted two Chinese survey ships cruising in waters
some 6 km southeast of Uotsuri Island of the Senkaku Islets in
Japan's territorial waters at around 8:10 a.m. Dec. 8. The two
vessels stayed in Japanese waters for over nine hours in defiance of
the Kunigami's warning and left in the evening. The Japanese
government was busy filing a protest with China through diplomatic
channels.

According to the patrol boat, the two vessels were the 1,100 ton
Haijian No. 46 and the 1,900-ton Haijian No. 51 of the China State
Oceanic Administration.

Prime Minister Taro Aso last night expressed strong displeasure to
reporters, saying: "It is quite regrettable, as it was clearly an
intrusion into Japanese territorial waters." Filing a protest with
Chinese Ambassador to Japan Cui Tiankai, Administrative Vice Foreign
Minister Mitoji Yabunaka demanded that the two Chinese vessels leave
the waters in question. Foreign Ministry Asian and Oceanian Affairs
Bureau Director-General Akitaka Saiki, who was visiting Beijing for
the six-party talks, also lodged a protest with his Chinese
counterpart, Vice Foreign Minister Wu Dawei.

Japan, China and South Korea are scheduled to hold in Japan on Dec.
13 their first trilateral summit separate from international
conferences. About the incident that occurred days before the
landmark event, a high-ranking government official said, "Honestly
speaking, the incident is incomprehensible." Speculation has spread
among some government officials that the incident might reflect the
thinking of Chinese hardliners, such as the military.

With the aim of breaking the impasse in the controversial issue of
developing gas fields in the East China Sea, Tokyo and Beijing
reached an agreement in June to jointly develop a gas field in the
northern area straddling the Japan-China median line. "Discontent is
simmering in China about what is agreed upon," said a source close
to Japan-China relations. Working-level talks to finalize specific
conditions have yet to be set in motion. The latest incident might
complicate the matter further.

4) Defense Ministry requests 80 billion to 100 billion yen be
included in fiscal 2009 budget for U.S. force realignment

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

The Defense Ministry has begun coordination with the Finance
Ministry for incorporating 80 billion to 100 billion yen -- four to
five times the amount in the current fiscal year -- in the fiscal
2009 state budget as the cost of the realignment of U.S. forces in
Japan. The United States has asked Japan for a greater financial
contribution to the planned relocation of U.S. Marines from Okinawa
to Guam, which is expected to move into full swing in the next

TOKYO 00003339 004 OF 009


fiscal year.

The Guam relocation requires the construction of military housing
and other buildings starting in fiscal 2009. Coordination is
underway to earmark about 40 billion yen for that.

The demolition of existing facilities for the relocation of Futenma
Air Station and the construction of hangers and family housing for
the relocation of a carrier-based air wing to the Iwakuni base are
projected to cost several tens of billions of yen.

The 2006 basic economic and fiscal policy guidelines specify that
the nominal growth rate of defense spending should be held below
zero. The Defense Ministry is insisting that part of the realignment
cost should be placed under a separate budget framework.

5) Financial bill to clear Diet on Dec. 12; Next regular Diet
session to be convened on Jan. 5

MAINICHI (Page 1) (Full)
December 9, 2008

Liberal Democratic Party (LDP) Upper House Diet Affairs Committee
Chairman Seiji Suzuki and his Democratic Party of Japan (DPJ)
counterpart Susumu Yanase yesterday agreed to take a vote in a full
session on Dec. 12 on a bill revising the Financial Functions
Strengthening Law to allow the government to inject public funds
into local financial institutions. The expectation is that a
DPJ-submitted bill will be approved in the House of Councillors by a
majority of lawmakers from the opposition parties. The ruling
coalition, however, will vote it down and pass its own bill with a
two-thirds vote in the House of Representatives. The government and
ruling parties then decided to close the current extraordinary
session on Dec. 25 and convene the next regular session on Jan. 5.

Meanwhile, the DPJ intends to vote down a bill amending the new
Antiterrorism Special Measures Law to extend Japan's refueling
mission in the Indian Ocean in a full session of the upper chamber
before Dec. 20, when the Lower House can take a second vote on the
bill. Therefore, the outlook is that the new antiterrorism
legislation will be readopted in the Lower House and it will be
enacted next week.

6) Sense of impasse spreading in LDP, with momentum for political
realignment waning

MAINICHI (Page 2) (Full)
December 9, 2008

The sharp plunge of public support for the Aso cabinet in opinion
polls conducted by press companies has greatly shocked the
government and the ruling parties. An executive of the Liberal
Democratic Party (LDP) irritatingly said: "We have not carried out
politics based on public support." Although mid-ranking and junior
party members have criticized Prime Minister Taro Aso, they remain
unable to find a viable successor. Momentum for political
realignment by veteran lawmakers is also waning. The LDP remains
unable to come up with an effective strategy, with an eye on the
next House of Representatives election. Meanwhile, Aso is trying to
find ways to shore up his political base, as seen from his seeking a
meeting this week with former Secretary General Hidenao Nakagawa,
who has distanced himself from Aso over fiscal and other policies.

TOKYO 00003339 005 OF 009

"There were good responses during his round of visits to isolated
islands. I was disappointed at the cabinet support ratings announced
today." Deputy Secretary General Mikio Hayashi, prior to an LDP
executive meeting last evening, referred to the prime minister's
visit to Kyushu over the weekend. In response, Diet Affairs
Committee Chairman Tadamori Oshima said: "You should not mention
support ratings." Aso said in the executive meeting: "The
responsibility for the steep decline in public support totally rests
with me."

Former State Minister for Administrative Reform Yoshimi Watanabe and
23 other mid-ranking and junior party members will discuss today
what approach they should take. A key member of this group, though,
commented: "It would be rational for the prime minister to take care
of Diet deliberations, because he compiled the budget." Some junior
members are moving to form a parliamentary group separate from those
sharply criticizing the government. As it stands, there is no
solidarity in the LDP.

The fact that they remain unable to draw up a post-Aso scenario is
cited as one of the major reasons for the lack of unity in the
party. They cannot find in the party a post-Aso successor who can
lead the party to an election win.

In the latest survey by the Mainichi Shimbun, the support rate of
the Aso cabinet fell 15 points to 21 PERCENT . Asked to choose
between the Democratic Party of Japan (DPJ) and the LDP, 46 PERCENT
picked the DPJ, while 29 PERCENT chose the LDP. If the DPJ wins a
sole majority in the next Lower House election, momentum for
political realignment will fade away. Veteran lawmakers eager for
political realignment, such as Nakagawa, are being pressed to revamp
their strategy.

7) Opposition stepping up criticism of Prime Minister Aso

YOMIURI (Page 4) (Slightly abridged)
December 9, 2008

Opposition parties seeking a change in government have strengthened
criticism of the administration of Prime Minister Taro Aso, whose
public support ratings have plummeted in the polls. Some members of
the Democratic Party of Japan (DPJ), the largest opposition party,
are calling for submitting to the Diet during the current session a
no-confidence motion against the Aso cabinet and a censure
resolution against the prime minister. However, other DPJ lawmakers
are cautious about such an idea, judging that the party should keep
close tabs on the 'self-destruction of the Aso administration,'
since the largest opposition party has regarded the next regular
session to be convened in January as the main battlefield for Diet
debate. The government is expected to present a second supplementary
budget for fiscal 2008 to the regular session.

DPJ President Ichiro Ozawa told reporters yesterday in Iwata City,
Shizuoka Prefecture:

"The figures mean that the public is suggesting (the prime minister)
quit his job if he can't do anything. I think (dissolution of the
House of Representatives) could occur early next year."

When asked by a reporter about whether his party would submit to the
ongoing Diet session a no-confidence motion against the cabinet or a

TOKYO 00003339 006 OF 009


censure motion against Aso, Ozawa just replied: "I think the members
in charge will consider it, but (Aso) will not be able to resist
public pressure asking him for a vote of confidence."

Tadayoshi Ichida, head of the secretariat of the Japanese Communist
Party, pointed out at a press conference: "There is no question as
to the submission of a no-confidence motion against the cabinet and
prime minister." Social Democratic Party Chairperson Mizuho
Fukushima stressed in an outdoor speech in Tokyo: "Why don't we ask
the Aso cabinet to resign?"

There is a hard-line argument in the DPJ that the party should speak
for the public's voice as stated in opinion polls. Some members have
called for submitting a no-confidence motion against the cabinet to
the Lower House and a censure resolution against the prime minister
to the Upper House. Their aim is that the move will become the
impetus to attract junior lawmakers in the ruling Liberal Democratic
Party, who are considering forming a new party, assuming that they
will not win in the next Lower House election under Aso's
leadership. Secretary General Yukio Hatoyama yesterday told
reporters:

"As to the question of whether to submit a no-confidence motion or
censure resolution, we need to consider how the extraordinary
session should be proceeded in consideration of the situation in
which public distrust in the cabinet is growing."

Hatoyama did not deny the possibility of his party presenting such a
motion to the Diet.

Many in the DPJ, however, are negative about the submission of a
motion, with one member saying:

"It is difficult for even LDP lawmakers who have stepped up anti-Aso
movements to vote for a no-confidence motion presented by the
opposition. If a no-confidence motion is voted down, it will mean
that the Aso cabinet wins confidence. It could eventually rescue the
prime minister."

Some DPJ members are concerned about the possibility of being drawn
into the vortex of political realignment due to turmoil in the LDP.
A senor member of the People's New Party gave the DPJ a warning: "If
working on political realignment under the economic slump, the
public will criticize the opposition."

8) Aso may find it difficult to demonstrate own policy identity on
budget, with bureaucrats distancing themselves from government

YOMIURI (Page 2) (Full)
December 9, 2008

The steep drop in public support for the Aso cabinet is expected to
affect work to compile the fiscal 2009 budget. Prime Minister Aso
hopes to shore up his administration's political base by
demonstrating his own policy identity in the budget-compilation
process, but fierce resistance is expected as he loses his political
strength.

The focus of attention in the compilation process is on to what
extent fiscal disbursements will be increased.

In its guidelines for the compilation of the fiscal 2009 budget, the

TOKYO 00003339 007 OF 009


government specified that it will flexibly boost government spending
while maintaining the guideline for ceiling on budgetary requests.

In a liaison meeting of the government and the ruling parties
yesterday, Aso emphasized the need to maintain a balance, saying:
"We must follow the guidelines. But it is also necessary to take
steps to deal with the most abnormal economic situation of the
century." The emphasis of the need for balance stems from a judgment
that a significant increase in government spending, deviating from
the structural reform line that has been continued since the Koizumi
government, might draw fire from the public.

In the Liberal Democratic Party, however, many members are
ratcheting up pressure on the government to augment spending.

A senior party member said: "The compilation of the fiscal 2009
budget is the sole chance for the prime minister to play up his own
policy imprint prior to the next House of Representatives election.
He should increase expenditures without thinking about fiscal
resources." Calls for increasing outlays for public works projects
also remain strong in the party. It is uncertain whether Aso will be
able to reject such calls from party members.

The government has so far curbed expected natural increases in
social security expenses by 220 billion yen a year. Aso has
indicated that the government would review this policy, but the
question is where the fiscal resources will come from.

The government and the ruling parties were looking into raising the
cigarette tax or reducing the rate of the burden that the
unemployment insurance program places on the national treasury. But
tobacco farmers, a voting base for the LDP, have raised strong
objections. Criticism is also erupting of the proposed reduction in
the rate of the burden shouldered by the government due to the
deteriorating job market. Under these circumstances, the issue of
fiscal resources is unlikely to be resolved easily.

The steep plummet of public support for the Aso cabinet is also
casting a pall over bureaucrats' loyalty to Aso.

A senior Finance Ministry official remarked: "LDP members have begun
to criticize the government coolly. Frankly speaking, we now find it
difficult to be close to the Aso administration." A senior official
of the Education, Science and Technology Ministry stated: "Keeping a
possible change of government in mind, we have started calling on
members of the Democratic Party of Japan."

9) Government, ruling camp start mulling economic stimulus measures
costing 20 trillion yen with focus on environment, medical services

YOMIURI (Page 1) (Full)
December 9, 2008

The government and the ruling parties on December 8 started looking
into a new set of economic stimulus measures that will require
fiscal disbursements worth 15-20 trillion yen over a three-year
period starting in fiscal 2008. Their plan is to promote the
creation of a basis for growth of the Japanese economy over the
medium to long term until it fully recovers, which is expected to
take three years, according to Prime Minister Aso. Emphasis will be
given to the environment, distribution, and medical services.


TOKYO 00003339 008 OF 009


With regard to the environment, the promotion of new forms of
energy, including fuel cells and energy-saving measures, will be
promoted. In terms of distribution, projects that will lead to a cut
in companies' distribution costs, including the improvement of
Haneda Airport, ports and harbors, as well as the frontloading of
the construction of highways, will be included.

In order to improve the problem of sick persons being refused by one
hospital after another, emergency rooms where only basic medical
care is provided will be built.

While the second package of economic stimulus measures for the
period from August and beyond focused on emergency measures
following the financial crisis, the new package will give priority
to projects that will lead to the expansion of domestic demand and
people's peace of mind over the medium to long term.

The size of projects has yet to be worked out. Given the fact that
the additional economic stimulus measures adopted in October cost 5
trillion yen in terms of fiscal spending and 27 trillion yen in
terms of project scale, the new set of measures will likely become a
major one.

Funding will be drawn from an increased second supplementary budget.
PM Aso is expected to decide on the use of funds in the key issue
promotion framework in the initial budget for fiscal 2009. Portions
of those funds will also be used to fund the new package. When it
adopted a basic policy on the compilation of the fiscal 2009 budget
on December 3, the government took the position of maintaining the
budget request guidelines, while making a decisive response in a
separate framework.

10) Decentralization reform panel recommends consolidating central
government's local branches involving cutting 34,600 jobs

MAINICHI (Top Play) (Excerpts)
December 9, 2008

Chairman Uichiro Niwa (Itochu Corporation chairman) of the
government's Decentralization Reform Promotion Committee on December
8 submitted a second set of recommendations finalizing revisions to
the central government's local branches to Prime Minister Taro Aso.
The report recommends reducing 34,600 jobs or one third of the total
number of 95,836 (as of the end of March, 2008) at 15 branch offices
of eight government agencies, by transferring services to local
governments and downsizing organizations. It also seeks the
consolidation of nine branch offices, including the Land,
Infrastructure and Transport Ministry's regional development bureaus
and the Agriculture, Forestry and Fisheries Ministry's Regional
Agricultural Administration Office, possibly by three years later.

Gist of revisions to central government's local branches

? Devolution of power over 116 administrative duties to local
municipalities
? Cut the number of central government officials working at those
local branch offices by 34,600 officials, by transferring them to
local municipalities
? Set up a new local branch that consolidates regional development
bureaus and the Regional Agricultural Administration Office possibly
by three years later.
? Split the newly established regional government bureau into a

TOKYO 00003339 009 OF 009


regional promotion bureau and a regional engineering and
construction bureau and place them under the jurisdiction of the
Cabinet Office.
? Set up a regional promotion committee for local municipalities to
monitor the regional promotion bureau and the regional engineering
and construction bureau.
? Keep telecommunications bureaus and the Regional Civil Aviation
Bureau in place.

11) Former Prime Minister Nakasone hospitalized

ASAHI (Page 4) (Full)
December 9, 2008

Former Prime Minister Yasuhiro Nakasone, 90, has been admitted to a
Tokyo hospital with a broken right arm after falling at his home on
the night of Dec. 7. According to Nakasone's office, he remains
conscious and he will be hospitalized for about ten days.

SCHIEFFER

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