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Cablegate: Japanese Morning Press Highlights 12/10/08

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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
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CINCPAC FLT/PA/ COMNAVFORJAPAN/PA.

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

SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 12/10/08

Index:

1) Ambassador Schieffer at private symposium expresses hope that
Japan would dispatch civilians to assist Afghanistan's
reconstruction (Yomiuri)

North Korea problem:
2) Six-Party Talks: China submits proposal for verification of North
Korea's nuclear commitment, but Japanese delegate Saiki sees "severe
outlook" (Sankei)
3) No contact between Japan and North Korea at the Six-Party Talks,
reflecting Pyongyang's even tougher stance toward Tokyo (Tokyo
Shimbun)

4) Prime Minister Aso and visiting Russian dignitary agree to early
Putin visit (Tokyo Shimbun)

5) Revealed that 30 PERCENT of billeting for Komaki Base personnel
leased from APA, sponsor of the history essay contest that led to
ASDF chief Tamogami's dismissal (Tokyo Shimbun)

Politics in turmoil:
6) Yomiuri poll: 65 PERCENT of Japanese would entrust the
government to the Democratic Party of Japan (DPJ), despites doubts
about party's capability (Yomiuri)
7) With Aso's popularity plummeting, LDP lawmakers rushing to
distance selves from a failing administration (Tokyo Shimbun)

8) LDP groups being formed one after another, including one in which
former Prime Minister Koizumi showed up to address its meeting
(Tokyo Shimbun)
9) DPJ hopes LDP defectors will head its way to break ruling party's
two-thirds hold on Lower House seats that allows overrides of Upper
House rejected bills (Tokyo Shimbun)
10) DPJ looking on quietly to see if the LDP self-destructs, but
worried about realignment possibility (Yomiuri)

Economy in trouble:
11) Economy is in even worse shape than government had predicted
(Yomiuri)
12) Deficit bonds issued to cover the budget will be on a massive 35
trillion yen scale, a retreat from sound fiscal practices
(Mainichi)

13) Difficult to find compromise in latest round of WTO
negotiations, with latest clash over import restrictions (Asahi)

Articles:

1) U.S. hopes Japan will send civilians to Afghanistan: Schieffer

YOMIURI (Page 2) (Full)
December 10, 2008

U.S. Ambassador to Japan Schieffer yesterday participated in a
symposium on Japan's international security activities at Keidanren
Kaikan Hall at Otamachi in Tokyo, during which he expressed hopes
that Japan would send civilians to Afghanistan to help with that
country's reconstruction. The symposium was held by the Net
Journalist Association and co-sponsored by the Yomiuri Shimbun.

"Many people say Japan can do more for Afghanistan," Schieffer said.

TOKYO 00003345 002 OF 009


He added: "To avoid 'Japan passing' under the Obama administration,
Japan should say what Japan can do in Afghanistan. We can understand
that Japan cannot send the Self-Defense Forces due to constitutional
constraints. However, Afghanistan needs hospitals, schools, and
polling facilities. It's possible for civilians to do such work if
they go there."

The symposium was held with the participation of ambassadors and
ministers to Japan from eight countries and Japanese opinion
leaders.

2) China prepares draft for nuclear verification

SANKEI (Page 1) (Full)
December 10, 2008

BEIJING-Chief delegates to the six-party talks on North Korea's
denuclearization held the second day of consultations yesterday at
the Diaoyutai State Guest House, and China, hosting the six-party
talks, presented a draft document to be discussed regarding how to
verify North Korea's nuclear declaration. Their plenary meeting
ended in 10 minutes. After that, each country went over the draft
and stated its views to China. In addition, Japan held consultations
and coordinated with China, the United States, and Russia.

The draft has yet to be unveiled. However, Japan's chief delegate,
Foreign Ministry Asian and Oceanian Affairs Bureau Director General
Akitaka Saiki, told reporters yesterday evening: "There was much
room to improve the draft documentation. Japan, the United States,
South Korea, and Russia worked together and presented ideas (to
China)." However, Saiki also said it was difficult to foresee how
the talks would turn out.

North Korea has refused to specify in writing the sampling that is
needed to verify the amount of extracted plutonium that can be used
for nuclear weapons. As it stands, North Korea is still far apart
from the other five countries. The draft document does not refer to
sampling, but Saiki said it used an expression close to that.
Assistant Secretary of State Hill, the chief U.S. delegate, told
reporters that there was nothing strange in particular about the
draft document.

China has informally notified the other six-party members of a
schedule for consultations, and the chief delegates are to hold
consultations through today. Meanwhile, Japan has been calling for
bilateral talks with North Korea about the pending issue of Japanese
nationals abducted to North Korea. In this regard, Saiki said North
Korea has shown no action at all on that.

3) No contact between Japan and North Korea at six-party talks due
to North Korea's increasingly hard-line stand against Japan

TOKYO SHIMBUN (Page 2) (Full)
December 10, 2008

Takayuki Shimizu, Beijing

In the six-party talks on North Korea's denuclearization held on
Dec. 8-9, Japan and North Korea remained at odds on the 9th over
methods for verifying nuclear information supplied by Pyongyang and
economic and energy aid to that nation. The Japanese government
expected in this round to see negotiations on a reinvestigation into

TOKYO 00003345 003 OF 009


the whereabouts of the Japanese nationals abducted by North Korean
agents move forward, but there was no chance for Japan to make
contact with the North even on the second day of the talks. Although
North Korea agreed to carry out a reinvestigation in the talks with
Japan in August, Pyongyang has yet to fulfill its promise.

A Japanese informed source indicated that it was difficult for Japan
and North Korea to hold in-depth negotiations on the abduction
issue, remarking: "Even if the two countries hold talks, they will
go nowhere."

In this round of talks, "Japan must urge the North to implement the
items agreed on in August, including the abduction issue," noted
Chief Cabinet Secretary Takeo Kawamura. The Japanese government
unofficially asked Vice Foreign Minister Kim Kye Gwan, North Korea's
chief negotiator of the six-party talks, for bilateral talks.

But Japan is taking the lead in calling for the setting in writing
methods for verifying information, including taking samples from
nuclear facilities. The North has rejected this proposal. North
Korea also has heightened its intensifying its offensive against
Japan, showing no signs of responding to Japan's call for bilateral
talks.

There was a scene in a past session where the top Japanese envoy
negotiated with Kim in person in a dinner party held after the
plenary meeting to accept Japan's proposal for holding bilateral
talks. This time, however, the Japanese envoy left the hall early on
the night of Dec. 8, the first day of the talks.

Japanese chief negotiator Saiki told reporters that even on the
night of the 9th, "there was not such an atmosphere (for Japan and
North Korea to make contact)."

4) Aso agrees with Russian presidential administration chief to
arrange early Japan visit by Putin

TOKYO SHIMBUN (Page 2) (Full)
December 10, 2008

Prime Minister Aso met at the Prime Minister's Office yesterday
afternoon with Sergey Naryshkin, chief of the administration of the
Russian president. The two leaders agreed to arrange a visit to
Japan by Prime Minister Putin early next year and try to move
negotiations forward on the Northern Territories issue. Aso said: "I
hope to give shape (to a roadmap) to resolve the territorial issue
when Mr. Putin visits Japan." Naryshkin replied: "President Dmitry
Medvedev instructed administrative officials after the earlier
Japan-Russia summit to explore ways to resolve (the territorial
issue) with an accelerated approach." Both sides also agreed on the
view that the two countries should speed up negotiations on
concluding a criminal investigation mutual assistance treaty and a
nuclear power cooperation agreement.

5) 30 PERCENT of flats for billeting Komatsu Base personnel leased
from APA Group, according to government's written reply on Tamogami
issue

TOKYO SHIMBUN (Page 2) (Full)
December 10, 2008

The government revealed in its written reply adopted in a cabinet

TOKYO 00003345 004 OF 009


meeting yesterday that 30 PERCENT of the flats and hotel rooms
rented outside the base for billeting personnel at Komatsu Air Base
in Ishikawa Prefecture over the past six years were leased from
condominium developer APA Group.

The APA Group organized the essay contest that led to Toshio
Tamogami's dismissal as Air Self-Defense Force chief of staff over
his controversial essay justifying Japan's war of aggression. The
president of the APA Group is an influential supporter of Komatsu
Air Base, and he and Tamogami are old acquaintances.

According to the written reply, Komatsu Air Base concluded contracts
for 22 cases worth approximately 3.06 million yen between fiscal
2003 and the end of this October. Of these, eight contracts worth
about 930,000 yen were with the APA Group. The values of contracts
concluded with the APA Group accounted for more than 70 PERCENT of
the total value in fiscal 2005 and more than 50 PERCENT in fiscal
2003.

6) Poll: 65 PERCENT opt for DPJ to run government

YOMIURI (Page 2) (Full)
December 10, 2008

According to findings from a recent face-to-face nationwide public
opinion survey conducted by the Yomiuri Shimbun on Dec. 6-7, the
proportion of those who think it is all right to entrust the leading
opposition Democratic Party of Japan (Minshuto) with the reins of
government reached 65 PERCENT , up 7 points from the last survey
taken in October. The proportion of negative answers decreased 7
points to 31 PERCENT . Following the Abe and Fukuda cabinet, the Aso
cabinet, with the plunge in its popularity, is at the "terminal
stage" of its administration. The survey shows that nearly
two-thirds are now in favor of a change of government in which the
ruling and opposition parties would trade places.

The proportion of "would not mind entrusting the government" to the
DPJ rose from 38 PERCENT to 45 PERCENT even among those who
support the ruling Liberal Democratic Party. Among those who support
the New Komeito, the LDP's coalition partner, it increased from a
little over 10 PERCENT to 45 PERCENT . Even those supporting the
ruling coalition seem to realize the limitations of an LDP-led
coalition government. Among those with no particular party
affiliation, the figure rose from 61 PERCENT to 66 PERCENT .

In the survey, respondents were also asked if they thought the LDP
was competent to govern. To this question, 61 PERCENT answered
"yes," with 35 PERCENT saying "no." When asked about the DPJ, "yes"
accounted for 50 PERCENT , with "no" at 43 PERCENT . As seen from
these figures, the LDP remains above the DPJ in the public's
competency evaluation. When it comes to the LDP, however, "yes" had
decreased 6 points from the last survey. The DPJ rose 4 points. The
gap between the two parties decreased by almost half.

Among LDP supporters, 89 PERCENT answered "yes" when asked if they
thought the LDP is competent to govern, showing a slight decrease
from 91 PERCENT in the last survey. Among those unaffiliated, the
figure dropped from 60 PERCENT to 53 PERCENT .

A total of 3,000 persons were chosen across the nation, and answers
were obtained from 1,747 persons (58.2 PERCENT ).


TOKYO 00003345 005 OF 009


7) Increasing number of LDP lawmakers distancing selves from Aso;
LDP groups hold meeting one after another; Koizumi returns to front
stage

TOKYO SHIMBUN (Page 2) (Excerpts)
December 10, 2008

Shunsuke Shimizu

Filled with alarm about plummeting support ratings for Prime
Minister Taro Aso's cabinet, those groups in the ruling Liberal
Democratic Party (LDP) unhappy with Aso's administration held
meetings one after another yesterday. A growing number of LDP
members are turning their backs on the prime minister. The major
opposition Democratic Party of Japan (DPJ), too, has ratcheted up
its offensive against the extremely unpopular cabinet, the aim being
to maneuver toward taking over the reins of government through the
next Lower House election. The prime minister is now besieged from
all sides.

A group to maintain and promote postal privatization met yesterday
afternoon at LDP headquarters.

Appearing before the some 60 LDP lawmakers gathered at the meeting,
former Prime Minister Junichiro Koizumi said: "I want you to clearly
recall what the (postal) election three years was all about."

An LDP project team on reviewing the postal privatization plan also
met at LDP headquarters at around the same time. Koizumi described
this as a puzzling move.

There is a move in the LDP to revise the spending-cut policy course
that is based on the basic economic and fiscal policy guidelines for
2006. One attendant criticized the anti-postal-privatization move,
saying: "It is the wrong direction to return the country to the days
before the Koizumi reform initiative."

Since stepping down as prime minister in 2006, Koizumi has been
abstaining from active political moves, except for the previous LDP
presidential race in which he supported the candidacy of former
Defense Minister Yuriko Koike. Nevertheless, driven by a sense of
crisis over the move to back away from the structural reform drive
under the Aso administration, Koizumi seems to have returned to the
front stage.

A group of like-minded lawmakers seeking the swift implementation of
policies, including such junior and mid-level members as former
Chief Cabinet Secretary Yasuhisa Shiozaki and former Administrative
Reform Minister Yoshimi Watanabe and former Administrative Reform
Minister Toshimitsu Motegi, also met at LDP headquarters yesterday.
The number of members, who demand that Aso present a second fiscal
2008 supplementary budget to the current Diet session, increased
from 24 last month to 48.

Former Secretary General Hidenao Nakagawa and others are also
scheduled to hold a preparatory meeting on Dec. 1 on reforming the
social security system.

Members of such groups have all emphasized that toppling the Aso
cabinet was not their objective.

8) Aso desperate to stop LDP lawmakers from moving away from him;

TOKYO 00003345 006 OF 009


Chief cabinet secretary calls on heavyweights

TOKYO SHIMBUN (Page 2) (Abridged slightly)
December 10, 2008

Kei Sato

Acutely alarmed by plummeting support ratings for his cabinet and a
growing number of LDP lawmakers turning their backs on him, Prime
Minister Taro Aso has begun making efforts to keep a tight rein on
the LDP.

From Dec. 8 through the 9th, after sagging support ratings were
reported, Aso telephoned former prime ministers and faction heads to
tell them: "I am going to send the chief cabinet secretary. If you
have anything, please tell him."

At the prime minister's order, Chief Cabinet Secretary Takeo
Kawamura called on former Prime Minister Shinzo Abe and Komura
faction head and former Foreign Minister Masahiko Koumura on Dec. 8
and former Prime Minister Yasuo Fukuda and others on Dec. 9 to ask
for their cooperation in running the Aso administration.

Kawamura quoted Fukuda as saying: "(The prime minister) should make
utmost efforts for getting the (fiscal 2009) budget enacted without
thinking of Lower House dissolution for a snap general election."

Before long, Aso plans to hold talks with former Secretary General
Hidenao Nakagawa, who keeps his distance from the Aso
administration, to win anti-Aso forces over to his side.

About the purpose of the series of talks, Kawamura explained in a
press briefing yesterday: "We need to seek advice on how to overcome
(the crisis of the administration)."

The prime minister has tended to slight influential party members,
such as faction heads and former prime ministers, while giving
important posts to Finance Minister Shoichi Nakagawa, his close
friend, and his secretaries. With many junior and midlevel members
moving away from Aso, the prime minister seems to have found that he
can rely only on the factions and heavyweights.

But under the single-seat constituency system, tightening control
over factions no longer works. Whether the prime minister can stop
party members drifting away is unclear. Furthermore, putting high
priority on the factions, which have been regarded as a symbol of
the old LDP, might be criticized as returning to its former self.
Aso's efforts might end up accelerating the trend in the party.

9) To block two-thirds override vote, DPJ to focus on LDP members
rebelling against cash handout plan

TOKYO SHIMBUN (Page 2) (Abridged slightly)
December 10, 2008

Kei Sato

In view of the trend in the LDP of lawmakers distancing themselves
from Prime Minister Aso, the major opposition Democratic Party of
Japan has begun shifting its focus to debates in the regular Diet
session early next year. Specifically, the party's focus is on a
fiscal 2008 second supplementary budget and related bills to finance

TOKYO 00003345 007 OF 009


the flat-sum cash handout plan. The DPJ figures that if some ruling
coalition members revolted against the bloc's decision under fierce
pressure from the DPJ, the ruling coalition would not be able to
readopt those bills with a two-thirds vote in the Lower House and
that would result in either the resignation of the Aso cabinet or
Lower House dissolution.

In order for the ruling bloc to implement the fixed-sum cash
benefits plan, which the DPJ opposes, the bill must be readopted in
the Lower House. The LDP and the New Komeito hold a total of 335
seats in the Lower House. If 17 ruling coalition members act against
their parties' decision, the ruling bloc would not be able to reach
the necessary number of seats, which is 319.

In an on opinion poll conducted in early November by Kyodo News
Service, nearly 60 PERCENT of people reacted negatively to the cash
handout plan. Even some ruling party members are uncomfortable with
the idea of readopting the policy course that is unpopular among the
public. The DPJ is trying to take advantage of such an atmosphere in
the ruling bloc.

If the ruling bloc fails to implement Prime Minister Aso's top
priority of the cash handout plan due to some rebels in the LDP,
there might be no future for the Aso administration.

10) DPJ takes a wait and see attitude toward the LDP furor for the
moment, but some alarmed about political realignment

YOMIURI (Page 4) (Excerpts)
December 10, 2008

The Democratic Party of Japan (DPJ) at a meeting of its permanent
secretaries yesterday discussed how the party should respond to the
rapidly plunging support rates of the Aso Cabinet in the polls. In
order to reach the goal of an early Diet dissolution and snap
election, the view came out to seek dissolution through talks, which
would have the ruling and opposition camps decide on Diet
dissolution in exchange for an early passage of the second
supplementary budget for fiscal 2008 and the fiscal 2009 national
budget.

The proposal for talks to reach a settlement on dissolving the Diet
came from Vice President Ishii. In response, Diet Affairs Committee
Chairman Kenji Yamaoka rebutted, "A number of choices are being
considered, but this one will not work." Vice President Kan stated,
"Let's calm down. The nation will be watching to see if we can reach
a settlement." Both Yamaoka and Kan are alarmed lest the turmoil in
the LDP spread and involve the entire political sphere.

11) Monthly economic report: Government to determine that the
economy is worsening for first time in 6 years and 10 months

YOMIURI (Page 1) (Abridged slightly)
December 10, 2008

The government on December 9 decided to make a downward revision to
its overall assessment of the economy to be incorporated in the
December monthly report. This is the third consecutive monthly
downward revision. The decision reflects the sharp decline in the
domestic economy following the slowdown in the global economy
triggered by the financial crisis. There is a strong possibility of
the government determining that the economy is worsening for the

TOKYO 00003345 008 OF 009


first time since February 2002, taking a decline in production
activities and the worsening employment situation into
consideration.

It will finalize its decision after determining the outcome of the
Bank of Japan's "tankan" survey of business confidence for December
to be released on the 15th. Related government agencies will undergo
coordination regarding specific wording to be adopted. The wording
that will most likely be adopted includes "the economy is beginning
to decline" or "the economy has declined." Its judgment in the
November monthly report was: "The economy is weakening. Downward
pressure is rapidly increasing amid the global economy slowing
further."

12) Government bonds worth 35 trillion yen to be issued in fiscal
2009 budget: Clear retreat from effort to recapitalize nation's
fiscal base

MAINICHI (Page 1) (Full)
December 10, 2008

The government on December 9 started looking into setting the amount
of new government bonds to be issued in compiling the fiscal 2009
budget at between 34 and 35 trillion yen. This is due to a
substantial drop in estimated tax revenues, mainly corporate tax
revenues, in fiscal 2009 due to the economic downturn. The issuance
of new government bonds worth more than 30 trillion yen on the basis
of the initial budget will be the first in four years. The size
greatly exceeds the 30 trillion yen framework for the issuance of
government bonds set when the Koizumi administration was launched,
clarifying a shift from the policy of recapitalizing the nation's
financial base.

General-account expenditures that indicate the state's policy
spending will reach 51 trillion yen, topping 50 trillion yen for the
first time. This is due to the increase in the state contribution to
the basic pension in fiscal 2009. The total amount of the general
account, which shows the size of the budget as a whole, will likely
exceed 85 trillion yen, the largest ever for an initial budget. In
the meantime, tax revenues in fiscal 2008 will likely drop from the
originally estimated 53.6 trillion yen to 47 trillion yen.

As a result, the issuance of new government bonds will expand from
the 25.3 trillion yen as estimated in the fiscal 2008 initial budget
to around 33 trillion yen because of an increase in the issuance of
deficit-covering government bonds.

13) WTO talks having difficulty reaching compromise: Ministerial
meeting postponed due to confrontation over import limits

ASAHI (Page 12) (Excerpts)
December 10, 2008

A decision to hold a ministerial meeting under the Doha Round of the
World Trade Organization (WTO) was put off due to major gaps in
participating countries' positions. Opposition on the domestic front
of major member nations is also mounting, making it difficult for
them to make concessions.

Referring to the reason for putting off the ministerial meeting, WTO
Secretary General Lamy at a meeting of 30 major countries held at
the headquarters said, "Even if we hold a ministerial meeting right

TOKYO 00003345 009 OF 009


now, it will not come along. I want to continue talks little
longer." He had originally planned to hold such a meeting between
the 13th and the 15th. He will seek concessions from the U.S., China
and India over the next several days. The likelihood is that he will
decide to hold it between the 17th and the 19th, if he determines
that it is possible to do so.

Participating countries have yet to fill the gap in their views.
Lamy remains cautious, because if he holds a ministerial meeting
prematurely and it falls through, it would deal a major blow.

In Japan, the Central Union of Agricultural Cooperatives (JA-Zenchu)
held a rally in Hibiya, Tokyo, bringing together 3,000 participants
(released by the host) from all over the nation. Guest speaker Koji
Futada, chairman of the Liberal Democratic Party (LDP) Research
Commission on Trade in Agriculture, Forestry and Fishing Products
underscored: "The LDP will fight to protect agriculture at the risk
of its life. Though the cabinet is unpopular, we have a general
election close at hand."

Prime Minister Aso, Economic, Trade and Industry Minister Nikai and
Agriculture Minister Ishiba met before the cabinet meeting the same
day and discussed measures on the WTO. If an agreement is reached at
the WTO, tariffs of farm products, such as rice, would be brought
down by at least 20 PERCENT . Imports of the so-called
minimum-access rice would increase from the current 770,000 tons to
1 million tons. In the meantime, budget funds for farm households
are scarce due to a fall in tax revenues following the faltering
economy. The atmosphere that an agreement was inked, the ruling
parties would not be able to contest the next election is permeating
in their parties.

SCHIEFFER

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