Cablegate: Japanese Morning Press Highlights 06/26/07

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UNCLAS SECTION 01 OF 10 TOKYO 002878

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: JAPANESE MORNING PRESS HIGHLIGHTS 06/26/07

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

Opinion polls:
4) Foreign Ministry's annual poll of US attitudes finds good
feelings toward and trust in Japan at record highs
5) Asahi pre-election poll finds public still hopping mad about
pension issue, two major parties, LDP and Minshuto, evenly matched
going into the final stretch
6) Yomiuri survey of Upper House candidates finds pension mess is
the hot-button campaign issue for Minshuto and LDP

Upper House race:
7) LDP debating whether Prime Minister Abe should take
responsibility and step down in case of Upper House defeat,
particularly if only 44 seats won
8) Minshuto's Hatoyama says he will step down as party's secretary
general if the ruling coalition keeps its majority in Upper House
election
9) Former Prime Minister Mori: Abe need not step down even if the
LDP loses election
10) Abe being forced to change his election strategy, with education
reform, regional revitalization campaign pitches falling flat with
the public
11) Abe's political imprint seen in the 35 proportionate
representation races
12) Shocked by the suicide of Agriculture Minister Matsuoka, the LDP
has yet to choose a replacement candidate to run for his seat

13) Vice Foreign Minister Yachi defends Abe's US statement in April
on comfort-women issue, says it is up to US Congress now to decide
on resolution

14) Former defense chief Ishiba calls right of collective
self-defense the same as the right to defend one's homeland

15) Japan's national debt at its worst at end of fiscal 2006: 834
trillion yen

Articles:

1) TOP HEADLINES

Asahi: Tokyo Shimbun:
MAFF investigation into Meat Hope Co. finds 13 irregularities;
Illegal sales, including foreign products in domestic products,
changing expiry dates, started 24 years ago

Mainichi:
Chongryon deal: Former Public Security Intelligence Agency head
makes secret arrangement for buying Chongryon headquarters, by
pretending to trust investor, who later turned down request

Yomiuri:
All SIA staff to return part of their bonus; 1 billion yen in all

Nihon Keizai:
Mitsubishi-UFJ Financial Group decides to take more than 15 %
stake in Matsui Securities House; Internet securities industry to be
reorganized

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Sankei:
Distorted structure of SIA: Workers' paradise; Working while
smoking; Taking lunch break ignoring visitors

Akahata:
Government miscalculates national health insurance allocations:
1,000 local governments might have been affected; Naha City suffers
shortage of 550 million yen over 10 years

2) EDITORIALS

Asahi:
(1) Global warming countermeasures: Resourcefulness to involve
developing countries needed
(2) New TSE system: It should become a market that can earn high
marks worldwide

Mainichi:
(1) Third-party pension panel should reach convincing judgment that
is fair and transparent
(2) Minced meat scam: Why were such outrageous practices allowed to
continue?

Yomiuri:
(1) Beef-labeling scandal: Consumer trust in food has been betrayed
again
(2) Palestinian situation: It is dangerous to leave divisions
unattended

Nihon Keizai:
(1) Careful standards should be adopted to restore missing pension
premium payment records
(2) Beef-labeling scandal betrays consumer trust

Sankei:
(1) Pension committee should establish fair and flexible screening
standards
(2) Beijing Olympics: Environmental measures hold key to success

Tokyo Shimbun:
(1) Ferrosilt pollution: It is a crime committed by entire company
(2) New British prime minister: It is essential for him to work with
Germany and France

Akahata:
(1) Bill dismantling SIA: Will the government "dismantle" state
responsibility as well?

(07062603yk) Back to Top

3) Prime Minister's schedule, June 25

NIHON KEIZAI (Page 2) (Full)
June 26, 2007

09:28
Arrived at Kantei

10:03
Met at LDP headquarters with Secretary General Nakagawa, later
joined by former Education Revitalization Council member Yoshiie.

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11:19
Met at Kantei with Special Advisor Koike.

13:32
Attended at Nissho Hall in Toranomon symposium to support local
areas.

13:53
Recorded radio commercial for Upper House election at LDP
headquarters, joined by Acting Secretary General Ishihara.

15:39
Met at Kantei with Health, Labor, and Welfare Minister Yanagisawa,
joined by Chief Cabinet Secretary Shiozaki.

16:09
Met with Deputy Chief Cabinet Secretary Matoba, followed by Lower
House member Takeshi Noda.

17:01
Attended LDP board meeting in Diet building.

17:24
Met at Kantei those who were awarded for their efforts to facilitate
equal participation in society of men and women.

18:02
et with State Minister Takaichi.

19:06
Met at his official residence with Education Reform Council Chairman
Noyori and council members, attended by Education Minister Ibuki and
Shiozaki.

4) Poll: "Japan-US relations in good shape"-highest ever in US

YOMIURI (Page 4) (Full)
June 26, 2007

The Foreign Ministry yesterday released findings from its public
opinion survey conducted in the United States on Japan. In the
survey, respondents were asked if they thought Japan-US relations
were in good shape. In response to this question, "yes" accounted
for 67 % among the average public and 86 % among opinion
leaders. Both figures marked an all-time high. The survey was
outsourced to a private research firm and conducted from February
through March this year. For the survey, a total of 1,506 persons
were chosen from among citizens aged 18 and over, and 256 persons
from among opinion leaders. "Good shape" was up 4 percentage points
among average citizens, and up 1 point among opinion leaders. Asked
if Japan is trustworthy, "yes" accounted for 74 % among the
general public and reached 91 % among opinion leaders.

5) Poll: 92 % "still angry" at pension problem; LDP, DPJ close in
popularity

ASAHI (Page 1) (Abridged)
June 26, 2007

The proportion of those who think the general public is still angry
at the government's pension record-keeping flaws reached 92 % , the
Asahi Shimbun found from its seventh telephone-based serial public

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opinion survey conducted June 23-24. The proportion of those
thinking that public anger has now calmed down was only 4 % . Asked
about the ruling coalition's way of steering the Diet, 70 %
disapproved of force to get legislation through, with 17 % saying
there found no problem with this under majority rule. As seen from
these figures, the greater part of those surveyed were critical.
Meanwhile, ahead of next month's election for the House of
Councillors, the leading opposition Democratic Party of Japan
(Minshuto) was down to 23 % as a party of choice for proportional
representation, with the ruling Liberal Democratic Party was up a
bit to 24 % . The DPJ and the LDP are now about evenly matched. The
figures, however, show that the DPJ remains unable to take advantage
of the public criticism of the ruling parties.

In the survey, respondents were also asked if their anxiety over
their pensions has been dissolved. To this question, "no" accounted
for 54 % , with "yes" at only 10 % . The proportion of those who
had no anxiety was 31 % . In addition, a total of 66 % answered
that they want the nation's pension system to become a point of
contention between the ruling and opposition camps in the upcoming
House of Councillors election.

The Abe cabinet's support rate was 31 % (32 % in the last
survey), with its nonsupport rate at 48 % (51 % in the last
survey). The Abe cabinet's support rate still stays low, but it
rebounded to around 60 % among those who support New Komeito, the
LDP's coalition partner.

6) Pension the focus of 53 % of LDP candidates, 84 % of DPJ
candidates in Upper House election

YOMIURI (Page 1) (Abridged)
June 26, 2007

Ahead of the July 29 election for the House of Councillors, the
Yomiuri Shimbun conducted a questionnaire survey of prospective
candidates. As a point of contention in the election, more than 80 %
of those expected to run from the leading opposition Democratic
Party of Japan (Minshuto) cited the nation's pension system. Among
those expected to run from the ruling Liberal Democratic Party,
"pensions" accounted for about 50 % , with "education reform" also
at about 50 % . The figures show the two parties' respective
stances in the run-up to this summer's election.

The survey was conducted from early June with a total of 288 persons
who are expected to run in the nation's 47 electoral districts or in
its proportional representation blocs as candidates on the ticket of
a political party or as independents or minor party candidates.
Answers were obtained from 263 persons (91.3 % ).

In the survey, respondents were asked to pick one or more policy
challenges they will take up in campaigning for the upcoming House
of Councillors election. In response, the pension issue was named by
53 % of LDP candidates and 46 % of New Komeito candidates. On
the side of the opposition parties, 84 % of those running from the
DPJ selected pension issues, with 82 % among those running from
the People's New Party (Kokumin Shinto), 77 % of Japanese
Communist Party candidates, and 70 % of Social Democratic Party
(Shaminto) candidates.

Asked about the advisability of amending the Constitution,
affirmative answers accounted for more than 80 % among LDP and New

TOKYO 00002878 005 OF 010

Komeito candidates. Among DPJ candidates, affirmative answers
accounted for 35 % , with negative answers at 36 % . As seen from
these figures, opinion was split in the DPJ.

Prime Minister Abe has declared his intention to take up
constitutional revision in the upcoming Diet election. Nevertheless,
just 13 % of LDP candidates and 8 % of New Komeito candidates
said they would take that approach.

7) LDP desperate to contain arguments for Abe to assume
responsibility (if election lost); 44 seats as dividing line for
Abe's resignation

MAINICHI (Page 5) (Excerpts)
June 26, 2007

There is growing momentum in the ruling coalition, particularly in
the Machimura faction, to which Prime Minister Shinzo Abe used to
belong, to contain emerging calls for Abe to assume responsibility
for the results of the July 29 House of Councillors election. They
are taking precautions against possible calls in the Liberal
Democratic Party for Abe to step down after the election should the
ruling coalition be forced into the minority in the Upper House.
Given the Abe administration's plummeting support ratings, the LDP
might erupt with strong calls for Abe to take responsibility in case
the party ended up winning only slightly over 40 seats in the
election, which would be an uncontrollable situation.

"The upcoming election will not be an election to risk the reins of
government. We must not panic and must remain steadfast. There is no
need to dissolve the House of Representatives."

Former Prime Minister Yoshiro Mori delivering a speech yesterday in
Himeji City, Hyogo Prefecture, indicated that even if the ruling
coalition were forced into the minority by the upcoming election,
there would be no need for the prime minister to step down or
dissolve the Lower House.

Ahead of Mori, LDP Secretary General Hidenao Nakagawa attempted to
contain calls for Abe to take responsibility. Appearing on a talk
show program on June 24, Nakagawa said: "The Upper House election
will be a midterm test for the administration. The ruling
coalition's failure to maintain its majority will not entail the
resignation of the prime minister."

What is common between Mori and Nakagawa is their determination not
to make Abe, the third premier from the Machimura faction since
Mori, resign as prime minister within one year after taking office.
Abe's resignation might endanger Seiwakai's (Machimura faction)
control over the LDP, which was wrestled from Keiseikai (Tsushima
faction).

But there is already talk in the LDP about a replay of the 1998
Upper House election in which the LDP won merely 44 seats and then
Prime Minister Ryutaro Hashimoto resigned to take responsibility. In
order for the ruling coalition to keep a majority (122 seats), it
needs to win 64 seats in the upcoming election. In the event the New
Komeito keeps its 13 seats, the LDP will need 51 seats. A former
cabinet minister who keeps his distance from Abe took this view: "If
the LDP ended up with a couple of seats short of 51, that would not
escalate into the prime minister's resignation. But if the party
were six to seven seats short of 51, the prime minister would have

TOKYO 00002878 006 OF 010

to resign." The 44-seat line that put an end to the Hashimoto
administration is surfacing as the dividing line for Abe.

8) Minshuto Secretary General Hatoyama: If LDP, New Komeito win
majority, I will step down from my post

YOMIURI (Page 4) (Full)
June 26, 2007

In a speech yesterday at Waseda University, Minshuto (Democratic
Party of Japan) Secretary General Yukio Hatoyama indicated that he
would step down from his post if his party failed to force the
ruling coalition to a minority in the House of Councillors election
next month. He stated: "I have no intention to remain in my current
post if my party is defeated. Our victory is to force the ruling
parties to become a minority." He also said: "If Minshuto wins Upper
House seats more than the Liberal Democratic Party (LDP), it will
demand the post of Upper House president. But if the party fails to
win, centrifugal force could have a substantial effect."

Regarding the consumption tax rate, he stated:

"There is a strong possibility that the rate will be hiked in the
future. However, we have made a political decision that it will be
difficult to immediately impose a burden on those who are already
suffering from an increased burden."

9) Former Prime Minister Mori: No need for Abe to resign even if
ruling coalition loses majority

YOMIURI (Page 4) (Full)
June 26, 2007

Former Prime Minister Yoshiro Mori, a member of the Machimura
faction in the ruling Liberal Democratic Party (LDP), delivered a
speech in the city of Himeji, Hyogo Prefecture. Referring in it to
Prime Minister Shinzo Abe's responsibility if the ruling coalition
falls short of a majority in the House of Councillors in the July 29
election, Mori indicated his view that there would be no need for
Abe to step down from the prime minister's post. He stated:

"The Upper House election will not give voters the chance to choose
the party they feel should hold the reigns of government. If the
ruling parties lose a majority, it will be difficult for them to
deliberate bills in the Upper House. The ruling coalition should
deal steadily with issues related to people's livelihoods, not bring
up issues that would be at odds with the opposition camp."

10) Prime Minister Abe's public appeal about his efforts to
revitalize education and local economies falls flat

NIKKEI (Page 2) (Full)
June 26, 2007

Prime Minister Shinzo Abe is now being forced to review his strategy
of prioritizing education reform and revitalization of regional
economies due to the pension record fiasco.

In a rally to back the candidacy of Kosuke Yoshiie, former member of
the Council on Education Revitalization, who is expected to run in
the House of Councillors election next month, Abe said yesterday:
"We need the power to push ahead with education reform." Yoshiie is

TOKYO 00002878 007 OF 010

a main candidate of the ruling Liberal Democratic Party and able to
make public appeals about Abe's efforts on education reform. Abe,
characterizing the current Diet session as a session for placing
emphasis on education reform, was able to enact three bills related
to the issue. However, his effort has now been buried by the pension
fiasco. The pension issue was main topic of discussion in his
meeting last night with council members. He said in the meeting: "I
will deal steadily and speedily with the pension issue."

Every weekend, Abe has been on the campaign trail desperately
playing up his policy of attaching importance to local economies in
speeches for the Upper House election. However, he has not made any
headway due to the pension controversy. In the city of Yamagata on
June 24 he had to spend much time explaining the government's
measures to handle the pension issue, only spending five minutes on
his plan for revitalizing regional economies.

He was supposed to play up his achievements, but the reality is that
he was too busy explaining the government's measures for the pension
record fiasco.

11) 2007 Upper House election: LDP picks candidates, including
education specialist Yoshiie, Special Advisor Nakayama,
demonstrating Abe policy imprint

YOMIURI (Page 4) (Full)
June 26, 2007

The Liberal Democratic Party decided yesterday to field Hiroyuki
Yoshiie, 36, a member of the government's Education Rebuilding
Council, as a candidate for the House of Councillors election in
July. The main ruling party has now completed the recruiting of 35
candidates to run in the proportional representation segment of the
election. Besides Yoshiie, who has addressed educational reform, the
LDP has also picked Special Advisor Kyoko Nakayama, who has been
long engaged in the issue of Japanese nationals abducted by North
Korea. The lineup of candidates shows the LDP's desire to
demonstrate Prime Minister Abe's policy imprint. In the LDP,
however, some wonder if they are attractive enough to get support,
with one grumbling: "There is no candidate who will be able to score
significant votes enough to overcome the pension problem."

Prime Minister Abe met Yoshiie at party headquarters yesterday and
encouraged him, saying: "In order to promote education reform, the
power to cut through the fog is necessary. I want you to display
your power and energy in politics by all means."

LDP Secretary General Nakagawa said in a press conference yesterday:
"(With the endorsement of Yoshiie,) the party has finished the
process of selecting candidates. We were able to recruit strong
candidates who will be able to lead the LDP to victory."

On the abduction issue, to which the Abe administration is also
giving priority, the prime minister personally persuaded Nakayama to
run in the election. In addition, Abe moved to put up former House
of Representatives members Seiichi Eto and Kenzo Yoneda, with whom
the prime minister has acted together on the abductions, history
textbooks, and other issues. Prime Minister Abe thus selected many
whose political beliefs are close to his.

The LDP has not put up any other former Lower House members besides
Eto and Yoneda, probably out of consideration for its junior ruling

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partner New Komeito, with which the LDP has established an election
cooperation setup.

LDP support groups tend to support former bureaucrats. This time,
however, many organizations have fielded their members as candidates
for the first time, such as the Central Union of Agriculture
Cooperatives and the National Federation of Fisheries Cooperative
Associations. Upper House Chairman Aoki and others, worried about a
decline in LDP support groups' vote-getting power, moved to take
this strategy.

Meanwhile, the LDP approached many distinguished people in various
areas, such as soccer player Kazuyoshi Miura, but they declined the
offers. Secretary General Nakagawa stressed yesterday: "We picked
persons who have achieved results in special fields. It is not
correct to think that the party chose them because of their
popularity." But a senior LDP member was overheard saying: "The
fickle unaffiliated voter will determine the outcome of the
election. In this sense, the lineup of candidates is somewhat
unspectacular."

12) LDP, which has yet to recover from shock of Matsuoka's suicide,
decides not to field its authorized candidate in a Lower-House
by-election in Kumamoto 3rd district

TOKYO SHIMBUN (Page 2) (Abridged)
June 26, 2007

Tetsuya Furuta

A Lower-House by-election to fill the position of former Agriculture
Minister Toshikatsu Matsuoka, who committed suicide, is set for the
same day, July 29, as the Upper House election. In order to avoid
any adverse impact of the so-called Matsuoka shock on the Upper
House election, the governing Liberal Democratic Party (LDP) decided
not to put up its official candidate for the Lower House
by-election. In the Kumamoto constituency for an Upper House seat,
the LDP's incumbent, Issui Miura, former Lower House member Nobuo
Matsuno fielded as a new recruit by the major opposition Democratic
Party of Japan (Minshuto), and the Japanese Communist Party
(JCP)-backed newcomer Yoshiaki Hashida are expected to vie for a
seat. What effect will the Matsuoka shock have on the upcoming Upper
House election?

Yoshiyuki Araki, a Kumamoto Prefectural Assembly member of the LDP,
eyed as a successor to Matsuoka, applied on June 5 to the LDP
Kumamoto chapter for its official support for his candidacy for the
by-election. But on June 7, the Kumamoto chapter decided not to
field any official candidate, out of consideration of former Lower
House member Tetsushi Sakamoto.

Sakamoto, a former LDP prefectural assembly member, ran as an
independent in the Kumamoto 3rd electoral district for the Lower
House election in 2003 and defeated Matsuoka. Matsuoka somehow won
election under the proportional representation system. In the Lower
House election in 2005, Matsuoka revenged a defeat.

Soon after Matsuoka killed himself, a rumor flew around that
Sakamoto was expressing his eagerness to run for the Lower House
by-election. Sakamoto, who had planned to run for the next Lower
House election, has made it clear that he would back Mimura and has
deepened cooperation with him. If the prefectural chapter endorses

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Araki as an official LDP candidate, Sakamoto would get cranky,
thereby causing the Miura camp to fall into disarray.

However, if the prefectural chapter puts Sakamoto on the LDP ticket,
a fierce objection would be raised by the Araki-Matsuoka camp; as a
result, the Miura camp could split up. Caught in between the
"pro-Matsuoka" group and the "anit-Matsuoka" group, the prefectural
chapter was forced to be on the sidelines.

Araki and Sakamoto eventually announced they would run as
independents. The LDP Prefectural Chapter's Secretary General
Katsunari Nishioka visited major Diet members elected from Kumamoto
Prefecture at their offices in the Diet Members' Building in
mid-June and conveyed to them the prefectural chapter's policy that
"with priority given to the Upper House election, Diet members and
prefectural assembly members will not intervene at all in the
upcoming Lower House-by-election." In an interview with the Tokyo
Shimbun, Nishioka stressed: "If Diet members or prefectural assembly
members have a hand in the by-election, the split could spread to
the entire prefecture and affect the Upper House election."

13) "It's up to US Congress' decision" on whether to take a vote on
House comfort-women resolution

ASAHI (Page 4) (Full)
June 26, 2007

At a press briefing yesterday, Administrative Vice Foreign Minister
Shotaro Yachi referred to the US House Committee on Foreign Affairs'
move to take a vote today on the resolution calling on Prime
Minister Abe to offer an official apology to former comfort women
and noted: "The prime minister during his visit to the United States
in late April offered a heartfelt sympathy and an apology." "I don't
think our efforts to explain about Japan's attitude have something
to do with the move for vote-taking. It is the US Congress that will
make a decision whether to take a vote or not. I have nothing to add
about this," Yachi added.

14) Ishiba: Right to collective self-defense is right to defend
country

MAINICHI (Page 5) (Full)
June 26, 2007

Former Defense Agency Director General Shigeru Ishiba delivered a
speech in the Mainichi Public Opinion Forum, held yesterday by the
Mainichi Shimbun in Fukuoka City. In it, Ishiba said: "The right to
collective self-defense was born in order to allow small countries
to defend themselves on the assumption that the United Nations fails
to function property in time of a conflict." Ishiba also rebutted
the opposition camp's argument that if the right to collective
defense was made constitutional, Japan would end up having a hand in
America's acts of aggression, saying: "The right is not designed to
let a country join a major power's highhandedness but to defend
itself from such."

15) National debt reaches record high of 834 trillion yen as of end
of fiscal 2006; Amount combined with debts held by local governments
tops 1,000 trillion yen

YOMIURI (Page 2) (Full)
June 26, 2007

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The outstanding balance of government debt including government
bonds and borrowings as of the end of fiscal 2006, released by the
Finance Ministry on June 25, reached a record high of 834.3786
trillion yen, up 0.8 % from the preceding year. The amount
combining the outstanding balance of debts held by local governments
reaches approximately 1,001 trillion yen, topping the 1,000 trillion
yen level for the first time.

The amount translates into the state shouldering debts 17 times
higher than the expected tax revenues for fiscal 2006 worth
approximately 49 trillion yen. The outstanding balance of debts per
capita including babies comes to 6.53 million yen in terms of the
amount held by the state, and 7.83 million yen in terms of debts
combining those held by both the central and local governments.

The outstanding balance of all local governments as of the end of
fiscal 2006 is estimated to reach approximately 201 trillion yen.
The balance calculated by subtracting duplicated portions between
the central and local governments (approximately 34 trillion yen) in
the special account for local allocation tax from the amount
combining the outstanding balance of national debt, including the
amount of outstanding government bonds issued to procure funds for
special corporations, and the outstanding balance of debts held by
local governments comes to approximately 1,001 trillion yen.

SCHIEFFER

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