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Cablegate: Daily Summary of Japanese Press 09/14/06

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RUEHNAG/AMCONSUL NAGOYA 7839
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RUEHBJ/AMEMBASSY BEIJING 4173
RUEHUL/AMEMBASSY SEOUL 0303
RUCNDT/USMISSION USUN NEW YORK 1943

UNCLAS SECTION 01 OF 04 TOKYO 005308

SIPDIS

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 09/14/06


INDEX:

(1) Govern to impose financial sanctions against North Korea
possibly this month, including a ban on overseas remittances to that
country

(2) Abe plans to strengthen Kantei in two stages

(3) Azadegan oil field talks to continue allowing for Japan to gain
time for determining international situation over Iran's nuclear
development program

ARTICLES:

(1) Govern to impose financial sanctions against North Korea
possibly this month, including a ban on overseas remittances to that
country

MAINICHI (Top play) (Excerpts)
Evening, September 14, 2006

The government today set a policy direction of implementing possibly
this month financial sanctions against North Korea that would target
groups and individuals suspected of being connected to that
country's development of weapons of mass destruction (WMD) by
banning such transactions as withdrawing savings from financial
accounts and transmitting cash remittances overseas, and by freezing
assets. The measures will be based on the United Nations Security
Council condemning North Korea after it launched missiles. Even
though two months have gone by since the UNSC resolution was passed,
North Korea has not responded to requests for dialogue, and at this
point, there appears to be no prospect of it returning to six-party
talks. The judgment was made that additional sanctions were
necessary.

The possibility is that the sanctions will be implemented before
Prime Minister Koizumi leaves office on Sept. 26.

The contents of the sanctions will be set under the provisions of
the Foreign Exchange Law. The more than a dozen groups and
individuals to be subject to the sanctions will be based on the 12
groups and one individual that the US has already targeted, plus
those identified by information gathered by investigative
authorities in each country. The designated groups and individuals
will need government permission to withdraw savings from accounts in
domestic financial institutions and to send cash remittances
overseas. Since it cannot be proved that the transaction would be
unrelated with WMD development, the measure is in effect a ban. In
the case of overseas accounts, as well, a permission system will be
in effect regarding remittances from Japan to those accounts. So
again, a ban will be in effect. The 12 organizations and one
individual that the US has made subject to financial sanctions are
mostly North Korean trading companies and financial institutions.

(2) Abe plans to strengthen Kantei in two stages

MAINICHI (Page 2) (Abridged)
September 14, 2006

An outline of Chief Cabinet Secretary Shinzo Abe's plan to enhance
the functions of the Prime Minister's Official Residence (Kantei)
once he becomes prime minister became clear yesterday. The plan is
chiefly designed to: (1) establish a Japanese version of the

TOKYO 00005308 002 OF 004


National Security Council; (2) increase the number of deputy chief
cabinet secretaries; (3) enhance the role of the cabinet public
relations secretary; and (4) expand the political appointee system
to include senior government officials. But the presentation of
bills for establishing the NSC and other posts would not occur until
next year's ordinary Diet session or later, as they would require
additional legislation or law revision. For this reason, an Abe
government intends to strengthen the existing Kantei system in two
stages for the time being.

In his policy platform, Abe has come up with the idea of
establishing a Kantei-led system. Ahead of this, LDP Policy Research
Council Chairman Hidenao Nakagawa, who is close to Abe, ordered an
LDP think tank to study specific means to strengthen the Kantei. A
study is underway by a political power enhancement project team,
established in August by five private-sector experts.

The NSC will be modeled after America's National Security Council.
Until an NSC establishment law is established, the administration
would utilize the Council for Overseas Economic Cooperation chaired
by the prime minister, which was established in April under Abe's
lead.

Abe wants to increase the number of deputy chief cabinet secretaries
for parliamentary affairs to five, which is fixed at two under the
current Cabinet Law. As such, Abe intends to appoint five junior
ruling party members as prime ministerial assistants, one each
responsible for: (1) diplomacy and security; (2) economics; (3)
education; (4) second chances; and (5) administrative reform. Once
the Cabinet Law is revised, three of them will be promoted to the
post of deputy chief cabinet secretary.

The LDP think-tank puts high priority on expanding the political
appointee system. The government now automatically approves
personnel actions above the level of director-general, which are
subject to cabinet decisions. "We need to set the stage for giving
senior posts to persons who share the prime minister's policies," an
LDP source said.

Abe also indents to make major changes to the role of the cabinet
public relations secretary. He is specifically considering giving
the public relations secretary access to the core of the government
to let him hold regular press conferences instead of the chief
cabinet secretary so that he can remain as a stagehand.

(3) Azadegan oil field talks to continue allowing for Japan to gain
time for determining international situation over Iran's nuclear
development program

YOMIURI (Page 9) (Almost full)
September 14, 2006

Japan's right to develop Iran's Azadegan oil field has been
threatened because of such issues as that country's nuclear program.
But it looks now that bilateral talks on the oil development project
will continue. Japan has been able to narrowly hold on to its right
to independently develop the oil field, which is seen as key to its
energy security. Still, with US confrontation with Iran growing and
Washington mulling possible sanctions against that country, Japan
finds it has no choice but to give priority to international
cooperation. It is under pressure now to make a difficult choice as
to how to continue its strategy of securing energy supplies.


TOKYO 00005308 003 OF 004


Economic sanctions

Both Iranian Petroleum Minister Vaziri-Hamaneh and Economy, Trade
and Industry (METI) Minister Nikai indicated their intention to
continue the oil field development talks even after the Sept. 15
deadline. However, while Vaziri-Hamaneh took an optimistic view on
talks progressing, Nikai was cautious about the possibility of
reaching an agreement at an early date.

Iran's agreement to continue the talks with Japan is a switch from
the previous stance of brandishing the threat of transferring
Japan's rights in the Azadegan project to some other country. Behind
this policy change is Iran's reaction to -growing international
criticism. The US has opposed Japan's participation in the
development of the Azadegan oil field right from the beginning. The
United Nations Security Council (UNSC) also is looking into the
possibility of imposing economic sanctions on Iran. Under such
circumstances, Iran, which wants to avoid becoming isolated in the
international community, views Japan as a partner that can be easily
brought into the fold. Motivated by a desire to press Japan to make
an early decision, Vaziri-Hamaneh noted that how the talks will
develop depended on Japan's decision.

In the meantime, the Sept. 15 deadline was the worst possible timing
due to growing international criticism of Iran. For Japan, if the
development of the Azadegan oil field were to put on the back
burner, it would be hopeless to expect to develop another oil field
in the Middle East, as a senior METI official put it. Japan,
therefore, had no other choice but to continue talks for the time
being, while waiting for the situation in Iran to change.

The US, which is increasingly at odds with Iran, will most likely
indicate its displeasure at the continuation of the talks between
Japan and Iran. It will most likely make a stronger call for putting
a moratorium on the project plan. Some observers think that China
and India, both trying to secure rights to develop oil fields all
over the world, are now moving ahead to land the Azadegan project in
anticipation of Japan giving up the talks.

As a reason for not being able to go ahead with the development,
Japan has cited the delay in the work of removing land mines planted
on the project site during the Iran-Iraq war. However,
Vaziri-Hamaneh on the 13th declared that the work to remove land
mines "has been completed." Japan is gradually exhausting its
excuses for postponing its decision-making.

Talks to review contract

Talks between INPEX, Japan's oil development company, and Iran's
state-run oil company are also facing difficulty on conditions for
beginning the project due to the soaring crude oil prices.

According to an informed source, the contract signed between INPEX
and Iran's state-run oil company is based on a buy-back system, in
which INPEX receives oil as payoff for its investment in the
project. However, as crude oil prices went up, the number of
projects to develop oil fields have increased throughout the world.
As a result, the shortage of such materials as mining machines has
given rise to price increases. It is said that the estimated total
investment amount has risen by 20-30 PERCENT from the original
amount of 2 billion. INPEX has asked Iran to increase the amount of
crude oil to be supplied to Japan to cover the increased portion,
but Iran is refusing to agree to the request. There is no prospect

TOKYO 00005308 004 OF 004


for the two companies to be able to coordinate differences in the
views on this issue.

Iranian Petroleum Minister Kazem Vaziri-Hamaneh: "A settlement will
be reached"

-- What is the present situation of the talks on the development of
Azadegan?

"I have no intention of revealing the specifics of the talks.
However, the talks are going in a favorable direction. A settlement
will be reached. Land mines buried on the project site have been the
obstacle in promoting the project plan. However, they have already
been removed as of two days ago."

-- The deadline for the talks is Sept. 15.

"We are determined to bring a successful end to the talks with Japan
and implement the project. We are pinning high hopes on the
development of the talks. Japan has rights to develop that the oil
field. We will continue the talks even after the Sept. 15
deadline."

-- The US is opposing Japan's participation in the development of
the Azadegan oil field.

"It is up to Japan to decide what it wants to do. If Japan has no
intention of carrying out the project, we will then end the talks."

(Interview Hiroyuki Nakamura in Vienna)

MEITI Minister Nikai: We will consider the issue from an overall
perspective in hopes of reaching an amicable settlement

-- Do you intend to continue the talks even after the Sept. 15
deadline?

"It is important to deal with the issue from an overall perspective
in hopes of reaching a settlement as smoothly as possible. Iran is
not acting in a one-man show. I fully discussed the issue with
Iranian Foreign Minister Motaki, when he visited Japan this
February. Iran considers Japan as an important negotiating
partner."

-- How are you going to deal with the issue amid a growing move to
impose economic sanctions on Iran?

"We cannot afford to neglect the need to cooperate with the
international community. It is not appropriate for Japan alone to
stand out. At the same time, Iran's role in Japan's energy policy is
great. I have a serious interest in this matter. Since the matter
involves an internationally delicate issue, I cannot put my cards on
the table."

SCHIEFFER

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