Cablegate: Japanese Morning Press Highlights 12/27/06

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UNCLAS SECTION 01 OF 09 TOKYO 007136

SIPDIS

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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 12/27/06

Index:

1) Top headlines
2) Editorials
3) Prime Minister's daily schedule

4) Administrative Reform Minister Sata likely to resign over
political fund abuse charges

5) Government's counterintelligence council meets for first time,
will set unified standards to prevent intelligence leaks

6) Yasukuni Shrine to revise display on China at Yushukan war museum

7) ODA white paper focuses on promotion of private sector activities
in developing countries through economic cooperation

8) Yomiuri opinion poll finds 78% of public do not feel the economy
has recovered

Economic agenda:
9) Cabinet Office simulation of national and regional incomes
predicts country's finances will move into black, eliminating need
for tax hikes
10) Prime Minister Abe appoints respected senior economist Kosai to
head recently vacated government tax council post
11) Ministry of Health and Labor to prevent part-time employees from
discriminatory treatment

12) Health and agricultural ministries after investigation will
allow US packer that mistakenly sent unauthorized byproduct to Japan
to resume exports of beef

13) Japanese diplomat, formerly in Yemen embassy and now in Honolulu
consulate, to be charged with absentee vote violation in Diet
election

Articles:

1) TOP HEADLINES

Asahi:
Death sentence for ex-Iraqi President Saddam Hussein finalized, to
be executed within 30 days

Mainichi:
Cabinet Office predicts surplus in primary balance of state and
local governments to return to black by FY2011 without consumption
tax hike

Yomiuri:
Comsn suspected of excessively claiming nursing-care benefits under
nursing-care system; Tokyo government investigate 50 offices

Nihon Keizai:
Toyota chairman meets Ford CEO over possible tie-up

Sankei:
Administrative Reform Minister Sato to resign over false political
fund reports

TOKYO 00007136 002 OF 009

Tokyo Shimbun:
Aneha handed five years in prison for fabricating
earthquake-resistance data

Akahata:
Administrative Reform Minister Sata's political organ submitted
false political fund reports claiming 78 million yen in expenses for
office that did not exist

2) EDITORIALS

Asahi:
(1) Man convicted of killing five people with poisoned wine deserves
benefit of the doubt
(2) Two years after quake off Sumatra: Real recovery lies ahead

Mainichi:
(1) Poisoned wine murder case: Credibility of confession in question
after 45 years
(2) Strengthening order to collect defective goods is needed to
protect people (senior writer Keita Koizumi)

Yomiuri:
(1) Regulatory reform plan: Consideration needed also for adverse
effects
(2) Aneha sentenced to five years in prison: Victims' anger will not
be eased

Nihon Keizai:
(1) Strong expectations for new Tax Commission Chairman Kosai
(2) Tokyo District Court condemns Aneha's concealing of
quake-resistance data falsification

Sankei:
(1) Aneha handed prison term: Long way for architects to regain
public confidence
(2) Nabari (poisoned wine) murder case: The same court reverses
decision

Tokyo Shimbun:
(1) Poisoned wine murder case: Look at the course of events
(2) Court sentences Aneha to five-years: High professional ethics
required

Akahata:
(1) University budget cuts: Abe government unqualified to talk about
"education reform"

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, December 26

NIHON KEIZAI (Page 2) (Full)
December 27, 2006

10:04
Attended a cabinet meeting at Kantei. Met Japan Tobacco President
Hiroshi Kimura and former President Katsuhiko Honda. Later attended
a meeting of the taskforce to deal with heavily indebted persons.

10:52
Met Deputy Foreign Minister Yabunaka and European Affairs Bureau

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Director General Harada.

12:35
Met Chief Cabinet Secretary Shiozaki, deputy chief cabinet
secretaries Shimomura, Suzuki, and Matoba, and special advisors,

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including Koike.

13:21
Former Education Minister Nakasone and former Agriculture Minister
Shimomura.

14:05
Attended a meeting of the Council on Economic and Fiscal Policy.

15:00
Met special advisor Nemoto. Followed by New Komeito President Ota
and others. Later, met Policy Research Council Chairman Nakagawa.

17:30
Met Cabinet Office International Peace Cooperation Office
Secretariat Chief Ozawa, and assistant deputy chief cabinet

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secretaries Ando and Yanagisawa.

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18:54
Enjoy the musical "Girlfriends" with his wife, Akie, at the
Hakuhinkan Hall, Ginza.

21:51
Returned to his official residence.

4) Administrative Reform Minister Sata likely to resign to take
responsibility for false political fund reports amid growing
criticism in ruling coalition

SANKEI (Top Play) Full)
December 27, 2006

A political organization for State Minister in charge of
Administrative Reform Genichiro Sata, 54, representing the Gunma No.
1 electoral district, submitted false political fund reports
claiming expenses for an office that did not exist, according to
allegations. Amid growing calls in the ruling coalition questioning
Sata's moral responsibility for the alleged violations, Sata himself
appears to have decided yesterday to step down from his post. Aides
to Prime Minister Shinzo Abe have begun looking for his replacement.
The dominant view among Abe's aides is that the prime minister has
no choice but to remove him from the cabinet post in a bid to
minimize the negative impact on the Abe administration.

Abe revealed last night to reporters that he had told Sata to
explain the reports to him quickly, saying, "I told Mr. Sata to
thoroughly investigate the reports and that political funds must be
properly reported. I also told him that politicians must act
properly."

With this regard, a high government official made this comment: "The
results of the investigations must be submitted by Dec. 28 at the
latest. It is too late to submit them next year." If the murky
situation continues, Abe's responsibility for appointing him might
be called into question.

In his press conference on Dec. 19, Sata severely criticized former

TOKYO 00007136 004 OF 009

Tax Commission Chairman Masaaki Honma for having lived in a
government-paid apartment without authorization, saying, "I want him
to make a decision on his own and act properly."

Sata in a press briefing yesterday, however, would not admit to the
allegations, reiterating: "I learned them for the first time
thorough media reports. I will explain after investigating them." He
and his secretaries have sequestered themselves since yesterday
afternoon, canceling all official duties.

Opposition parties, meanwhile, made it clear they wanted his
resignation, with Minshuto (Democratic Party of Japan) Secretary
General Yukio Hatoyama saying, "If the allegations are true, he must
resign. The prime minister has responsibility for appointing him."

Criticism is gaining impetus in the ruling coalition. A senior New
Komeito member noted: "The amount of political money involved is too
large. It is not a matter that can be resolved by saying a secretary
did it." An LDP member said, "He will be able to make a decision in
one or two days after learning the results of the investigation." As
a result, it appears that Sata has no choice but to resign.

5) Gov't to work out info guidelines for leak prevention

YOMIURI (Page 4) (Full)
December 27, 2006

The Counterintelligence Promotion Council, a government panel
chaired by Deputy Chief Cabinet Secretary Junzo Matoba, held its
first meeting yesterday at the prime minister's office. In the
meeting, the panel decided to formulate guidelines for the
government to prevent intelligence leaks. The guidelines will
incorporate regulations for government officials handling classified
information.

The government will set up a working group under the panel. The
working group, which will be made of officials at the division
director level from various ministries and agencies, will study
intelligence leakage cases in the past, such as the suicide of a
Japanese diplomat posted at the Consulate General of Japan in
Shanghai, China. This diplomat committed suicide with a note
reportedly saying he was coerced by Chinese intelligence authorities
into providing classified information.

6) Yasukuni Shrine museum to retouch China exhibits, soften
offensive descriptions

ASAHI (Page 26) (Full)
December 27, 2006

Yasukuni Shrine yesterday began retouching the historical
descriptions of panels exhibited at its war museum, Yushukan. The
shrine, with Toshiaki Nanbu as its chief priest, will modify panel
descriptions over the outbreak of war between Japan and the United
States as planned. In addition, the shrine will also change
China-related exhibits, such as the Manchurian Incident and the
Sino-Japanese War of 1937-45. The museum will be temporarily closed
until the end of the year and will be reopened to the public on Jan.
1.

The Yushukan museum will replace seven panels headlined
"Russo-Japanese War to Manchurian Incident," "Manchurian History,"

TOKYO 00007136 005 OF 009

"China Incident," "Hitler," Stalin," Roosevelt," and "Japan-US
negotiations."

One of the seven panels is about the outbreak of Japan-US war on
Dec. 8, 1941, saying that US President Roosevelt "drove Japan, a
resourceless country, into a corner with an embargo and compelled
Japan to open war." The museum will delete this description, which
stresses the United States' responsibility. Instead, the museum will
exhibit replacements, including a diary of US War Secretary Stimson,
to indicate that the United States had an "intention" to open war.

In addition, the museum will exhibit the "Imperial edict to open
war" with an English translation for foreign visitors to deepen
their understanding of Japan's position in those days. The United
States was also critical about the current description of war
between Japan and the United States.

The museum is reviewing its exhibits and retouching their panel
descriptions under the supervision of Taro Nagae, former chief
researcher at the National Institute for Defense Studies, a think
tank of the Defense Agency. "Historical documents will be in place
so as not to cause misunderstanding," Nagae says.

Yushukan will also modify the China-related descriptions of its
exhibits, but Yasukuni Shrine's public information division says it
cannot disclose any of their changes until the museum is reopened to
the public. "Yushukan's exhibition was intended to cope with a
masochistic view of history," a shrine official said. "But," this
official added, "there were also excessively offensive expressions
against other countries, so we'd like to soften that point."
However, the shrine will not recognize the Sino-Japanese war as a
"war of aggression."

Yushukan is a war memorial to praise fallen soldiers, and it was
rebuilt and opened in July 2002. It will mark its fifth anniversary
next year and will continue to review and retouch its exhibition.

7) Promote private-sector activities through economic cooperation,
ODA White Paper notes

TOKYO SHIMBUN (Page 2) (Full)
December 27, 2006

Foreign Minister Taro Aso presented the Official Development
Assistance (ODA) White Paper for fiscal 2006 at a cabinet meeting
yesterday. According to the report, the total amount of ODA (yen
terms) extended in fiscal 2005 went up approximately 50% from the
previous year's level, reaching approximately 1.4474 trillion yen
due to special elements, including debt relief for Iraq and
assistance for the major earthquake off Sumatra and the accompanying
tsunami. If such elements were excluded, the total amount of ODA

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would be approximately 942.1 billion yen, down approximately 4%
compared with the preceding year.

As new objectives of ODA, the report cited promotion of
private-sector activities through economic cooperation and securing
energy resources through strengthened relations with natural
resource-rich nations. As specific measures to promote economic
activities, the report gave protection of intellectual property
rights and assistance for the signing of economic partnership
agreements.

TOKYO 00007136 006 OF 009

8) Poll: 78% don't feel economic recovery

YOMIURI (Page 2) (Full)
December 27, 2006

The Yomiuri Shimbun found from its recent a face-to-face nationwide
public opinion survey conducted Dec. 9-10 that a total of 78% did
not actually feel economic recovery or did not feel it very much,
even though the government has declared that the economy has been
recovering. In the survey, respondents were also asked if they
thought the nation's social divide-such as the income gap-has
widened. In response to this question, "yes" and "yes to a certain
degree" totaled 74%. Japan is said to be currently in the postwar
longest phase of economic expansion. However, the survey shows that
the general public does not actually feel such a declared economic
upbeat.

The total proportion of those actually feeling economic recovery
increased 4 percentage points from a survey taken in January this
year. Those not actually feeling it totaled only 21%.

Respondents were asked how their livelihood has changed over the
past year. In response, 69% said there was no change, topping all
other answers. To a question asking if they have held down their
spending, "very much" and "somewhat" totaled 63%.

Asked about the nation's social divide, more than 70% answered that
it has widened, with 22% saying it remains unchanged and only 3%
saying it has narrowed. In addition, a total of 67% answered that
there was economic disparity between urban and rural districts.

The survey also asked respondents about their living standard. To
this question, a total of 46% answered that it was average, topping
all other answers. However, the figure dropped 6 points from a
survey in December 2005. The proportion of those thinking of
themselves as "lower middle" class marked an all-time high of 33%,
up 6 points. The "lower" class also increased 6 points to 7%.

9) Primary balance of national and local governments can be brought
into black without tax hike: Cabinet Office; Necessary amount can be
reduced by 7 trillion yen

MAINICHI (Top Play) (Full)
December 27, 2006

The Cabinet Office yesterday released its estimate of the amount
needed to achieve the government target of moving the primary
balance of the central and local governments into the black in
fiscal 2011. It calculated that the necessary fiscal sources can be
reduced from the initially estimated 16.5 trillion yen to 9.5
trillion yen due to an increase in tax revenues as a result of the
economic recovery. If the maximum target for spending cuts to be
achieved by fiscal 2011 as indicated in the basic policy guidelines
on economic and fiscal management and structural reforms for the
fiscal 2006 national budget is accomplished, it would be possible in
sheer numbers to move the primary balance into the black without a
tax hike. The estimate will likely spark a trend to block
discussions calling for a hike in the consumption tax.

The report was presented yesterday at a meeting of the Council on
Economic and Fiscal Policy chaired by Prime Minister Abe.

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The basic policy guidelines for the fiscal 2006 estimated that 16.5
trillion yen in fiscal sources would be needed to move the primary
balance into the black. According to this estimate, the government
decided to reduce this number by 11.4-14.3 trillion yen over five
years from fiscal 2007 through fiscal 2011 through spending cuts and
cover the remaining amount with increased revenues. The Cabinet
Office has calculated that if the effects of increased revenues of
3.5 trillion yen and efforts to cut expenditures worth 3.5 trillion
yen in the fiscal 2007 draft budget are taken into account, the
amount of fiscal resources needed to bring the primary balance into
the black can be extensively reduced. The primary balance can be
shifted into the black without hiking the consumption tax, if
7.9-10.8 trillion yen, the amount worked out by deducting the
spending cut target for fiscal 2007 from the total target for
spending cuts, can be cut over four years.

Some government officials take the view that it is necessary to set
a new target for the surplus needed to move forward the time when
the primary balance will shift into the black and to reduce the
amount of outstanding debt. However, State Minister for Economic and
Fiscal Policy Hiroko Ota told a news conference, "The necessary
amount of fiscal sources will change, depending on future tax
revenues." She categorically said that the government has no
intention of changing its policy in the basic policy guidelines for
fiscal 2007. However, chances are high that if the present
government target is kept as is, an optimistic view toward fiscal
reconstruction could prevail, generating an argument in the ruling
camp that it is not necessary to raise the consumption tax.

10) Economic think-tank adviser Kosai tapped as tax panel head,
expected to follow economic expansion policy

ASAHI (Page 1) (Full)
December 27, 2006

Prime Minister Abe announced yesterday that he would install Yutaka
Kosai, senior adviser at the Japan Center for Economic Research, to
the post of chairman for the government's Tax Commission to succeed
Masaaki Honma, who resigned over a scandal. Kosai, former Cabinet
Office's Economic Society Comprehensive Research Institute head,
will be formally appointed chairman of the tax council at a plenary
session in January, after becoming a panel member as early as
today.

The prime minister told reporters at the Kantei last night:

"Since Mr. Kosai is highly knowledgeable about the financial and tax
systems, I have great respect for him. I hope he will work out a
well-balanced tax system."

In the government and the ruling camp, the name of Motoshige Ito,
professor at the University of Tokyo, was once floated, but Ito
declined the offer. Chief Cabinet Secretary Shiozaki, under the
instruction of the prime minister, asked Kosai yesterday to assume
the chairmanship.

Kosai spoke of his aspirations before reporters in Tokyo last
night:

"If the economy grows even slightly, it will be easier for problems
to be resolved in order to restore the nation's finances. In this
context, the role of the tax system is important."

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Kosai used to be an official at the former Economic Planning Agency.
He later served as Economic Research Institute chief research
officer and Tokyo Institute of Technology professor. In 2002, Kosai
mapped out a package of measures to dispose of nonperforming bank
loans as chairman of the project team on emergency response strategy
in the financial sector under Financial Services Minister Takenaka.
In 2005, as chairman of an expert research panel of the Council on
Economic and Fiscal Policy under State Minister in Charge of
Economic and Fiscal Policy Takenaka he produced a report titled,
"Japan's vision for the 21st century," which presented necessary
reform challenges for Japan in order to maintain its economic
strength.

The vision pointed out the possibility of raising the nation's real
economic growth rate by improving productivity and other means. This
view is close to Prime Minister Abe's policy of giving priority to
economic growth. Kosai is expected to succeed the former chairman's
stance of pursuing tax reform, focusing on revitalizing the Japanese
economy.

11) Ban on discriminatory treatment of part-timers: MHLW to submit
bill amending law

YOMIURI (Page 2) (Excerpts)
December 27, 2007

The Ministry of Health, Labor and Welfare (MHLW) yesterday decided
to incorporate a clause that bans a discriminatory treatment of
part-timers whose working conditions are the same as those of
fulltime employees in a bill amending the part-time labor law, which
is to be submitted to the regular Diet session next year. The Labor
Policy Council's Equal Employment Taskforce, which met yesterday,
compiled a report on measures for part-timers and submitted it to
MHLW Minister Yanagisawa.

The government has discussed possible amendments to the law as part
of its policy of correcting disparities between permanent and
non-permanent workers. The panel report noted that discriminatory
treatment of part-timers who have been under employment for a long
period of time and who work under the same conditions as those of
permanent employees in terms of, for instance, working hours and
assignments, should be banned. The bill also mandates employers to
issue a paper that stipulates working conditions, such as pay
raises, bonuses and retirement benefits. It also notes that
penalties will be imposed on employees, who failed in their
obligation and neglected the duty even after guidance and
recommendations are given. The legislation also obligates employees
to introduce a system of switching part-timers to permanent
employees in order to promote corporate efforts to employ
part-timers as permanent workers.

12) Eight US plants authorized to resume beef imports, with no
problems found in on-site inspections

ASAHI (Page 10) (Full)
December 27, 2006

The Ministry of Health, Labor and Welfare and the Ministry of
Agriculture, Forestry and Fisheries released the results of their
on-site inspections of eight US plants with licenses to ship beef to
Japan from Nov. 26 through Dec. 13. The two ministries announced

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that there were no problems, as the plants have complied with the
beef export procedures agreed on between Japan and the US, such as
the removal of specified risk materials.

An inspection was also conducted at the Swift Gregory plant in
Colorado, in whose shipment ineligible sweetbread was found in
October. The audit found that the cause of the violation was as
explained by the US side and that improvement measures have been
implemented. Based on this result, the two ministries will resume
import procedures for the beef shipped from Gregory starting today.

13) Former secretary at embassy in Yemen to be charged with
violation in absentee vote in 2003 Lower House election

NIHON KEIZAI (Page 39) (Excerpts)
December 27, 2007

It was found yesterday that the Metropolitan Police Department has
sent papers to prosecutors on a diplomat who was a second secretary
at the embassy in Yemen and now a consul in Honolulu on suspicion of
having filled in ballots prior to the voting period for the House of
Representatives election in November 2003 and having other embassy
staffer treat the ballots as valid votes.

The Foreign Ministry yesterday took disciplinary action against the
diplomat and another, including a salary cut of one-tenth of their
monthly pay for three months, and also punished two of their
superiors.

The illegal act was discovered due to a report from within the
embassy around the fall of last year. The Foreign Ministry accused
the diplomat of violating the Public Office Election Law in late
November of this year.

DONOVAN

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