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Cablegate: Japanese Morning Press Highlights 12/12/08

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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
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 12/12/08

Index:

Defense and security affairs:
1) MSDF refueling mission bill to pass Diet today by a Lower House
override vote (Mainichi)
2) Although MSDF to continue refueling operations in the Indian
Ocean, anxieties remain about their mission (Asahi)
3) Yokosuka sailor charged with slaying cabbie to undergo mental
tests (Mainichi)
4) Japan, Australia to meet next week for strategic talks, agreement
to strengthen cooperation (Nikkei)

North Korea problem:
5) Six-Party Talks close without agreement; now it is the problem of
the incoming Obama administration (Mainichi)
6) Nothing happening also on the Japan-North Korea dialogue
(Nikkei)
7) Japan expects Six-Party Talks to restart in several months
(Mainichi)
8) North Korea's strategy failed in the Six-Party Talks as Japan,
U.S., ROK held together in common front (Mainichi)

Economy in dire straits:
9) Government plans a 40-trillion yen economic stimulus package
(Yomiuri)

10) Government plans to set aside 3 trillion yen to assist middle to
large scale companies suffering in the economic crisis (Asahi)

11) Prime Minister Aso tangled in political wrangling over
consumption tax hike issue (Asahi)

12) DPJ plans own economic stimulus package to shake up Aso
administration in the Diet (Nikkei)

13) LDP's Hidenao Nakagawa, now openly opposed to the prime
minister, has gathered a group of 57 for his new anti-Aso
parliamentary league (Mainichi)

Articles:

1) Refueling bill to clear Diet today

MAINICHI (Page 5) (Full)
December 12, 2008

The House of Councillors Committee on Foreign Affairs and Defense
yesterday voted down a bill amending the new Antiterrorism Special
Measures Law to extend Japan's refueling mission in the Indian Ocean
by a majority of lawmakers from the main opposition Democratic Party
of Japan (DPJ), the Japanese Communist Party (JCP) and the Social
Democratic Party. The bill is expected to be voted down today in the
Upper House plenary session, as well.

With this, the ruling parties will readopt and enact the refueling
bill by a two-thirds overriding vote in the House of
Representatives' plenary session today.

The bill is designed to extend by one year the Maritime Self-Defense
Force's refueling operation, which will expire on Jan. 15. In a
debate ahead of taking a vote in the Upper House committee, DPJ's
Hisashi Tokunaga pointed out: "Since security in Afghanistan has

TOKYO 00003373 002 OF 009


been deteriorating year after year, the refueling mission will not
resolve the issue." Masayoshi Hamada, however, emphasized the
meaning of the refueling mission, saying: "Now is a critical time
for improving security (in Afghanistan)."

In an Upper House Financial Affairs Committee session yesterday, the
DPJ presented a revised bill to amending the Financial Functions
Strengthening Law, which suggests that ShinGinko Tokyo be excluded.
Since the number of pros and cons were the same, Committee Chairman
Naoki Minegishi, a DPJ member, decided that the bill was approved.
The DPJ voted for the bill, while the LDP, New Komeito, and the JCP
were against it.

2) Refueling assistance fraught with 3 concerns; Revised law to be
enacted today

ASAHI (Page 4) (Slightly abridged)
December 12, 2008

The House of Councillors Foreign Affairs and Defense Committee met
yesterday and voted down a government-introduced bill amending the
Refueling Assistance Special Measures Law for a one-year extension
of the Maritime Self-Defense Force's refueling activities in the
Indian Ocean with a majority of votes from the Democratic Party of
Japan (Minshuto) and other opposition parties. The
government-proposed legislation will be voted down in a plenary
sitting of the opposition-controlled upper chamber today. However,
the House of Representatives-where the ruling coalition of the
Liberal Democratic Party and the New Komeito have a majority of the
seats-will take a second vote on the bill in its plenary sitting
today to override the upper chamber's decision. Prime Minister Aso
has now forgone dissolving the lower chamber in defiance of the
opposition bloc's calls for an early dissolution, and the upper
chamber's deliberations on the legislation have been drawn out.
However, there are now three points at issue.

Afghan dispatch may become a political issue again

In a Nov. 6 House of Councillors Foreign Affairs and Defense
Committee meeting, Satoshi Inoue, a House of Councillors member of
the Japanese Communist Party, asked why the government sent a
fact-finding team to Afghanistan. "Did the government send the team
there for the purpose of dispatching ground and heliborne troops?"
Inoue asked. Chief Cabinet Secretary Kawamura replied: "It was not
premised on a dispatch. It was for general study."

In June this year, the government sent a fact-finding team to
Afghanistan and its neighbors. That was because the United States
and the North Atlantic Treaty Organization (NATO) had sounded out
Japan on dispatching the Self-Defense Forces to Afghanistan. The
team is said to have explored the possibility of sending Air
Self-Defense Force C-130 transport planes and Ground Self-Defense
Force heavy-lift helicopters for airlift activities.

At the House of Councillors Foreign Affairs and Defense Committee's
request, the government came up with an outline of the fact-finding
team's report. However, the government did not reveal anything
specific about the team's findings. "Disclosing specific information
could affect the safety of personnel and would seriously mar the
international community's trust," Kawamura stated before the
committee.


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However, an SDF dispatch to Afghanistan will likely become a
political issue again when the new U.S. administration is
inaugurated under President-elect Obama in January. There is growing
frustration among the opposition parties. "The government did not
show even the fundamental information that is a premise for
deliberations," said Hisashi Tokunaga, a House of Councillors member
from the DPJ.

Antipiracy legislation in the pipeline

The LDP and the DPJ are at odds over the issue of continuing the
MSDF's refueling mission. However, the two parties moved closer to
agreement.

Akihisa Nagashima (DPJ): "They (commercial ships) are being exposed
to the threat of pirates. It's vitally important to secure the sea
lanes."

Prime Minister Aso: "We would like to study what we have under the
law."

In an Oct. 17 House of Representatives Antiterrorism Special
Committee meeting, Nagashima, who knows well about security policy,
suggested the need for the government to take measures (for tankers
and other Japanese commercial ships) against pirates that are
rampant in waters off the coast of Somalia. In response, the
government began a full-fledged study to create a new law against
pirates, giving heed to the option of sending MSDF vessels.

"In the Indian Ocean, there is drug trafficking and there are
pirates. There is also the issue of shipping safety." With this,
Foreign Minister Nakasone made an appeal on the MSDF's refueling
activities in the Indian Ocean, meaning to say the MSDF's presence
there for refueling activities contributes to antipiracy measures.
However, the Refueling Assistance Special Measures Law stipulates
nothing about antipiracy measures. "You said that as foreign
minister. That is a problem, isn't it? You're stretching the law.
That's strange." With this, Shinkun Haku, a House of Councillors
member from the DPJ, made a countercharge to Nakasone.

The Air Self-Defense Force will withdraw its airlift detachment from
Iraq at the end of the year. In the meantime, the Diet will open its
ordinary session early next year. Its security debate will likely
focus on antipiracy legislation.

Overly optimistic thinking about civilian control

Another issue in the Diet debate has been civilian control. ASDF
Chief of Staff Toshio Tamogami was sacked for his release of an
essay that justified Japan's wartime aggression. However, the
government had little awareness of the problem. The prime minister
said, "Civilian control was exactly in place, so immediate dismissal
was possible."

The opposition bench pursued Tamogami's view of history. However,
the government reiterated that it would not comment on the essay's
descriptions. Defense Minister Hamada noted yesterday: "The essay
has inappropriate portions regarding the government's view and the
Constitution, but this does not come under the heading of a
political act."

3) U.S. sailor on trial for taxi driver slaying to under go mental

TOKYO 00003373 004 OF 009


tests ordered by the court

MAINICHI (Page 27) (Excerpt)
December 12, 2008

In the second hearing of U.S. Navy Seaman Apprentice Olatunbosun
Ugobogu, a 22 year-old Nigerian attached to the U.S. Navy base at
Yokosuka who is on trial for robbery and murder of a taxi driver in
Yokosuka City, Kanagawa Prefecture, the Yokohama District Court
yesterday ordered that he undergo mental tests that have been
requested by the defendant's lawyer.

Head judge Masaaki Kawaguchi gave as the reason: "The facts are
critical, so I wish to proceed cautiously." The testing will be
carried out in tandem with the trial and should take three months.

4) Japan-Australia security talks set for next week; Foreign and
defense ministers to agree on increased bilateral cooperation

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

The governments of Japan and Australia decided yesterday to hold a
Japan-Australia Security Committee meeting of the foreign and
defense ministers (2 plus 2) late next week in Tokyo. The two
countries are expected to reach an agreement to strengthen bilateral
cooperation on the security front to deal with major disasters and
the threat of terrorism.

With Australia reportedly willing to provide energy aid to North
Korea in place of Japan, in line with the six-party agreement, the
two countries are also expected to look for ways to coordinate their
North Korea policies.

From Japan, Foreign Minister Hirofumi Nakasone and Defense Minister
Yasukazu Hamada will attend the meeting. The two countries will
upgrade bilateral security cooperation by revising a memorandum on
the development of defense exchanges, inked in 2003, for the first
time in five years.

Envisaging cooperation in nuclear and arms nonproliferation and UN
peacekeeping operations, the meeting will also discuss joint
exercises between the Australian military and Japan's Self-Defense
Forces.

The upcoming meeting will be the second following the previous one,
held in June 2007 during the then Abe administration. In the
previous meeting, then Foreign Minister Taro Aso promoted
cooperation between Japan, the United States and Australia by
advocating the arc of freedom and prosperity initiative promoting
the democratization of Asia. Prime Minister Aso just agreed in
October on expanded security cooperation with India through
Japan-India summit. Planned coordination with Australia follows such
developments.

5) Six-party talks fails to reach agreement on verification
protocol

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

Mayumi Otani, Beijing

TOKYO 00003373 005 OF 009

The fourth day of the six-party head-of-delegation meeting on North
Korea's nuclear program ended yesterday without producing any
agreement stipulating a verification protocol for the North's
nuclear declaration, nor setting a date for a next meeting. The
chief negotiators were unable to fill the gaps between the three
countries -- Japan, the United States and South Korea, which
insisted that nuclear sampling should be codified -- and North
Korea, which refused to comply.

According to sources close to the six-party talks, the chief U.S.
envoy, Assistant Secretary of State Christopher Hill explained to
the participants the White House's official instruction that the
Bush administration would not allow bilateral talks between the U.S.
and North Korea before its term ends. The next round of the
six-party talks is now certain to be held after the administration
of President-elect Barack Obama is inaugurated in January.

The statement announced by China's chief envoy Wu Dawei, vice
foreign minister of China, host of the six-party talks, confirmed
only one thing, namely, that the next meeting would be held as soon
as possible. Japan's chief negotiator, Foreign Ministry Asian and
Oceanian Affairs Bureau Director General Akitaka Saiki said: "Nobody
thinks that the meeting was satisfactory."

With the failure in reaching an agreement on the codifying of a
verification protocol, South Korean chief envoy Kim Sook stated: "We
will consider whether to continue energy support." Meanwhile, North
Korean chief negotiator Kim Kye Gwan reported rebutted in the
meeting, arguing: "We will adjust the speed of disablement in
accordance with the aid we receive."

6) Japan-DPRK dialogue not realized

NIKKEI (Page 2) (Excerpts)
December 12, 2008

Takeshi Nagasawa, Beijing

In the latest six-party talks held in Beijing to discuss the
denuclearization of North Korea, Japan tried to find ways to have a
dialogue with the North to seek progress on the issue of Japanese
nationals abducted by the North. But Japan's efforts did not pay
off. Foreign Ministry Asian and Oceanian Affairs Bureau
Director-General Akitaka Saiki emphatically said on the night of
Dec. 11: "I want to continue to search for opportunities for a
dialogue." As is the case with the talks on the nuclear issue that
broke off, there are no prospects to break the deadlock regarding
the abduction issue.

A chairman's statement, released on the same day, simply urges Japan
and North Korea to make sincere efforts for resolving outstanding
bilateral issues and the normalization of bilateral relations. In
the six-party talks, the North held separate talks with the United
States, China, South Korea and Russia, but it declined Japan's call
for dialogue.

Dialogue between Japan and North Korea has not occurred since
bilateral working-level talks in August. Chief Cabinet Secretary
Takeo Kawamura said in a press briefing: "Channels have not been
closed, but it is a fact that we have not been able to have direct
talks (with the North)."

TOKYO 00003373 006 OF 009

7) Japan thinks next round of six-party talks will not take place
for several months

MAINICHI (Page 2) (Abridged slightly)
December 12, 2008

Mayumi Otani, Beijing

Through the latest six-party talks, the Japanese government has
concluded that the North has shifted its attention to the incoming
Obama administration of the United States, with a senior government
official saying: "The possibility has vanished that the next round
of talks will take place anytime soon." The government thinks it
will be several months before the Obama administration firms up its
diplomatic strategy and sets a clear policy (toward North Korea).
How to coordinate policy approaches with the Obama administration,
including the abduction issue, will be a challenge for the
government.

"We have agreed to meet again at an early date, but that will not be
easy," Japan's chief delegate and Foreign Ministry Asian and
Oceanian Affairs Bureau Director-General Akitaka Saiki told the
press corps in Beijing on the night of Dec. 11.

The Japanese government upheld the policy of seeking verification
methods, including the sampling of nuclear materials that would
leave no room for distortion or misunderstanding. The policy
approach reflected Japan's concern that the Bush administration in
its closing days might make compromises with the North. The results
have spread a sense of relief in Japan, with a senior Foreign
Ministry official commenting: "Although substantial fruits have not
been produced, that's better than an ambiguous agreement."

Nevertheless, Japan was not able to find a lead for making progress
on the abduction issue. Saiki said discouragingly: "The North did
not come with a policy intention of having a point of contact with
Japan."

8) North Korea's strategy fizzles in six-party talks; Japan, U.S.,
and South Korea remain firmly united

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

Shoji Nishioka, Beijing

In the six-party talks that took place in Beijing, North Korea
applied pressure on other countries that demanded nuclear
verification methods be put into writing. But because Japan, the
United States and South Korea that sought the sampling of nuclear
facilities remained firmly united, the North could not achieve its
objectives, including obtaining energy aid. Amidst a rumor that
North Korean leader Kim Jong Il is suffering from ill health, the
six-party talks have now been forced to readdress the North Korean
denuclearization issue with an eye on the Jan. 20 inauguration of
the Obama administration in the United States.

9) Government plans economic stimulus package worth 40 trillion yen

YOMIURI (Top Play) (Excerpts)
December 12, 2008

TOKYO 00003373 007 OF 009

In an effort to deal with the current economic downturn and the
deteriorating job market, the government decided yesterday to
significantly expand the additional package it had earlier
announced. It plans to boost measures related to the people's
livelihoods worth 27 trillion yen and job security measures worth 2
trillion yen. Since a bill amending the Law for Strengthening
Financial Functions authorizing the government to pour public funds
into financial institutions will clear the Diet today, the
government also plans to increase the amount of public funds to be
injected in domestic financial institutions from the current 2
trillion yen to 12 trillion yen. The size of projects in the
additional package is expected to reach 40 trillion yen. Prime
Minister Aso will hold a press conference today and spell out the
package.

The government intends to come up mainly with expanded employment,
monetary, and tax measures in the additional economic package.

Recently, there are many cases in which troubled companies cancel
job offers to new graduates and dismiss irregular part-timers. To
deal with this social problem, the package will include measures to
stabilize the job market and to assist companies in providing
dismissed workers with housing and daily necessities over the New
Year holidays.

In an effort to resolve financial institutions' credit crunch and
facilitate small businesses to raise funds, the government will
augment the amount of public funds to be used for financial
institutions under the new legislation from the current 2 trillion
yen to 12 trillion yen and will also take satisfactory measures to
secure the soundness of local financial institutions and to
stabilize the financial system.

On the Law for Strengthening Financial Functions, the Democratic
Party of Japan's revision bill was adopted in a meeting of the House
of Councillors' Fiscal and Financial Committee yesterday. The bill
will be sent to the House of Representatives today, but the ruling
parties will reject it and bring the government's bill back into the
Lower House for a revote.

10) Government to assist medium and large firms by disbursing 3
trillion yen

ASAHI (Page 1) (Full)
December 12, 2008

The government decided yesterday to map out 3 trillion yen worth of
assistance measures for medium and large companies as emergency
economic stimulus measures. The Development Bank of Japan will
purchase commercial paper (CP), a kind of debenture issued by
companies to procure short-term funds, at the scale of 2 trillion
yen. In addition, low-interest loans worth 1 trillion yen will be
offered. It will be the first time for the Development Bank of Japan
to buy CP.

The measure to purchase CP is aimed to help medium and large firms
raise funds. The government has already come up with a set of
assistance measures for small businesses, but it is also becoming
difficult for larger businesses to procure funds, given the ongoing
serious financial crisis. Specifically, Japan Financial Corporation
will lend money accrued by issuing investment-and-loan bonds to the

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Development Bank of Japan, and the bank will buy CP on the market
with the money. The total amount of purchase is estimated at 2
trillion yen. The government will insert necessary provisions in the
second supplementary budget bill for fiscal 2008 and next fiscal
year's budget bill, both of which will be submitted to the next
ordinary Diet session.

Growing financial instability has decreased the underwriters of CP.
The amount of CP newly issued in October was about 9 trillion yen,
down about 30 PERCENT from the same month a year ago. It has been
said that with few buyers, the market has been in a state of
collapse. Given this, market players have placed high expectations
on the government for assistance.

11) Time for consumption tax hike not specified in ruling camp's
mid-term program, due to New Komeito's opposition

ASAHI (Top Play) (Excerpts)
December 12, 2008

The Liberal Democratic Party and the New Komeito decided early this
morning not to specify the timing for hiking the consumption tax in
their mid-term program, a roadmap for future tax reform. The New
Komeito is against mentioning the time, with an eye on the next
general election. The LDP accepted its ruling partner's intention.
Prime Minister Aso instructed State Minister in Charge of Economic
and Fiscal Policy Kaoru Yosano last evening to put down "three years
later" as the timing for increasing the tax, but this instruction
was turned down the same day. Aso's political strength will
inevitably be dampened further.

LDP Tax System Research Committee Chairman Yuji Tsushima and his New
Komeito counterpart Yoshihisa Inoue held consultations at a Tokyo
hotel until early morning today and agreed to use this expression in
the ruling camp's tax reform outline for fiscal 2009 to be
incorporated in its mid-term program: "Drastic tax reform, including
a consumption tax hike, should be implemented after the economy
turns around." As the time for the hike, the expression "by the
mid-2010s" will be used. LDP tax panel subcommittee chairman Hakuo
Yanagisawa told reporters: "Since the New Komeito put up strong
resistance to the inclusion of a specific figure, we had to give
in."

Aso told Yosano at the Prime Minister's Office last evening: "I have
so far declared that the government will hike the consumption tax
three years from now. I hope my pledge will be reflected in the
mid-term program." Later, Aso also told reporters: "The principle is
to increase the consumption tax three years from now."

Based on the prime minister's intention, the LDP specified in its
initial draft that "the government will work out necessary legal
measures in 2010, and implement tax reform measures, including a
consumption tax hike, starting in fiscal 2011 and completing them in
2015." Meanwhile, the program inserted a provision noting that "a
flexible response will be made in accordance with changes in
economic conditions," showing a flexible stance of not raising the
tax if the economy remains stagnant. But New Komeito strongly
reacted to the initial draft, claiming that even if a flexible
provision is included, "three years later" might take on a life of
its own. As a result, the LDP made a significant concession.

12) DPJ plans strategic moves for the regular session of the Diet,

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presenting bill with economic stimulus measures, tying up the
administration by continuing deliberations

NIKKEI (Page 2) (Excerpt)
December 12, 2008

With the passage of two major bills, one extending refueling
operations in the Indian Ocean and the other recapitalizing banks,
the Democratic Party of Japan (DPJ) has begun to work out its
strategy for pursuing the Aso administration in the regular Diet
session next year. The plan is to tie up the ruling camp in the
regular Diet session by greatly continuing deliberations on bills
related to economic stimulus measures that the DPJ presented to the
Upper House on Dec. 11. The DPJ also will hold in reserve its
argument for presenting a censure motion against Prime Minister Aso
and a no-confidence motion against the cabinet to the regular Diet
session.

13) Hidenao Nakagawa, 56 other LDP lawmakers meet

MAINICHI (Page 5) (Excerpts)
December 12, 2008

A group of 57 Liberal Democratic Party (LDP) lawmakers, led by
former Secretary General Hidenao Nakagawa, held a meeting yesterday
at LDP headquarters. The group was formed by Nakagawa to plan relief
measures for the public. With the public's support for Prime
Minister Taro Aso's cabinet plummeting, junior and mid-level LDP
members such as former Administrative Reform Minister Yoshimi
Watanabe, who has stepped up criticism of Aso, and former Chief
Cabinet Secretary Yasuhisa Shiozaki, flocked to the meeting.
Nakagawa also showed up in a study session yesterday of lawmakers
from the LDP, the Democratic Party of Japan (DPJ), and New Komeito.
As seen in his activities, he is now in the forefront, with
political realignment in mind.

In the meeting held yesterday afternoon at LDP headquarters,
Nakagawa stated:

"I'm truly sorry for that our group is rumored to be a precursor to
a new party. I want you to discuss matters to create a social
security system under which the people can live with peace of
mind."

Nakagawa denied that his group was working on creating a new party.
He made an effort to play up that the group was formed only for the
purpose of discussing policy issues, by calling on former Prime
Minister Shinzo Abe and Election Strategy Council Deputy Chairman
Yoshihide Suga, who are close to Aso, to take part in the meeting.
In yesterday's meeting, Abe gave the group a warning, saying: "Now
is the time to pull together and support the Aso administration in
order to win back the trust of the people."

However, some LDP members are alarmed by Nakagawa's moves. Nakagawa
fielded former Defense Minister Yuriko Koike in the party leadership
race as a candidate to vie with Aso. He has repeatedly referred to
the possibility of political realignment, noting: "(The will of the
public) demands drastic change in politics." He also stated: "I will
make my decision the moment the election is over."

SCHIEFFER

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