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Cablegate: Japanese Morning Press Highlights 06/27/07-2

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RUEHUL/AMEMBASSY SEOUL 3681
RUCNDT/USMISSION USUN NEW YORK 4780

UNCLAS SECTION 01 OF 07 TOKYO 002898

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 06/27/07-2


North Korea problem:
14) Distrust growing in government, political circles of US'
conciliatory stance toward North Korea
15) Government alarmed about the abduction issue with North Korea
stagnating

16) Japan-China talks of E. China Sea gas fields hang up over areas
to be subject to joint development

17) UN Ambassador Oshima resigns; successor will be Minister to US
Embassy Takasu

Political agenda:
18) LDP, New Komeito issue joint election campaign pledges that
stress pension issue, downplay constitutional revision
19) Pension issue splits LDP with Koichi Kato critical of its
political handling

20) In order to stop leaks, MSDF to transfer personnel with foreign
spouses to units not handling classified material

21) Panel releases proposed revisions of the Anti-Monopoly Act, but
the report did not unify the penalty system

Articles:

14) Abe's US diplomacy stumbling: Tokyo distrustful of Washington's
conciliatory attitude toward DPRK over North Korean issue

NIKKEI (Page 2) (Full)
June 27, 2007

"The important thing is for North Korea to fully first implement the
first steps (toward abandoning its nuclear program)," Chief Cabinet
Secretary Yasuhisa Shiozaki said yesterday regarding US Assistant

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Secretary of State Christopher Hill's recent statement that the

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United States wanted to start within the year four-party talks among
North Korea, the United States, China, and South Korea to discuss a
peace mechanism for the Korean Peninsula. Shiozaki's remark revealed
a sense of alarm toward the move for setting a framework for talks
on North Korea without Japan's participation.

Creating a four-party framework to discuss how to build a peace
system on the Korean Peninsula to replace the current truce is the
long-cherished desire of North Korea, which has aimed at
reconciliation with the US. No doubt North Korea strongly pushed
Hill during his recent stay in the North to do so.

However, no one at the Prime Minister's Official Residence (Kantei)
was aware of Hill's statement as of yesterday morning, according to
an aide to the prime minister. That was why Shiozaki was surprised
when asked about it by reporters. In addition, it was the morning of
June 21 that the Kantei was informed of the assistant secretary's
plan to visit North Korea that day. Reportedly, the prime minister
was surprised when he was informed of that plan.

A Kantei official expressed discontent: "Mr. Hill is out of
control."

On the surface there is no change in the US government's
consideration to Japan. "Upon arriving at Osan Air Base (in South
Korea) after (the visit to North Korea), I first telephoned Ken

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Sasae," Hill said at a press briefing on June 25. By citing the name
of Kenichiro Sasae, director-general of the Asian and Oceanian
Affairs Bureau of the Foreign Ministry, Hill played up Japan-US
cooperation.

However, the Bush administration is revising its policy toward North
Korea with an eye on its term of office, which is to expire in one
and a half years. "We want to have six-party talks in early July and
a six-party foreign ministerial in late July," Hill said.
Overwhelmed by his "speed," all the Japanese side did was just to
check him. Japan and the US are apparently out of step.

Japan welcomes progress on the nuclear issue made in the recent
US-North Korea talks, but it is becoming distrustful of America's
conciliatory attitude toward North Korea, with one Japanese official
noting, "We might be left in the dark." In the days of Prime
Minister Junichiro Koizumi, who visited North Korea twice, the US
was irritated at where Japan-DPRK relations would go, but now the
situation has changed with the change of government in Japan.

15) Government to urge US to respond carefully to four-party Korean
Peninsula peace plan for fear of abduction issue being put on back
burner

YOMIURI (Page 2) (Full)
June 27, 2007

US Assistant Secretary of State Christopher Hill, US chief delegate
to the six-party talks, has proposed a plan to establish a body
composed of four countries -- the United States, China, South Korea,
and North Korea -- to work toward restoring peace on the Korean
Peninsula to replace the current Korean War armistice. This has put
the Japanese government on alert, with one official speculating that
the United States might have shifted its policy line toward dialogue
with North Korea. Desperately wanting to avoid the envisaged
four-party framework alone moving forward while leaving the
six-party talks on the nuclear and abduction issues behind, Tokyo
plans to call for Washington's cautious response.

Chief Cabinet Secretary Yasuhisa Shiozaki at a press conference
yesterday expressed a sense of displeasure with Hill's plan to build
a new framework, saying: "First of all, it is essential for (North
Korea) to completely implement the initial steps."

In September 2005, the six countries agreed that countries that
participated in the Korean War would discuss the establishment of a
framework on permanent peace on the Korean Peninsula. A similar
expression was included in the six-party agreement reached in
February. Japan, as a country that did not participate directly in
the Korean War, did not hope to join such a framework.

However, given the North's call to exclude Japan from the six-party
talks, there is a possibility that Pyongyang will try harder to
remove Japan from the multilateral framework by exhibiting eagerness
to join the four-party structure.

Shiozaki suggested that Japan might seek membership in the envisaged
new framework, saying: "Peace on the Korean Peninsula concerns the
Japan-US security setup, as well. (Parties directly concerned) are
not defined as the four countries, and things will be worked out
through future discussions."


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16) Japan-China talks: Gaps exist over sea areas for joint
development

MAINICHI (Page 9) (Full)
June 27, 2007

Hiroko Akimoto

Japan and China held the ninth round of working-level talks to
discuss gas field development in the East China Sea in Tokyo
yesterday. Discussion focused on the area of joint development, but
there was no progress, with both sides being far apart. The two
countries intend to continue talks to reach a conclusion by this
fall, but it is unclear whether they will be able to do so.

Joining the talks from Japan were Kenichiro Sasae, the director
general of the Foreign Ministry's Asian and Oceanian Affairs Bureau,
and Natural Resources and Energy Agency Director-General Harufumi
Mochizuki. After the meeting, Sasae told reporters: "Both sides have
deepened our understanding of each other but failed to reach
agreement. . . . China appears eager to accelerate the talks, but
their views do not match ours."

In the talks, the Japanese side asserted that four gas fields,
including Chunxiao (Shirakaba in Japanese), which is being developed
independently by China near the Japan-China median line, should be
jointly developed. Meanwhile, China reportedly again asserted that
joint development should be carried out in waters near Japan.

17) Ambassador to UN Oshima to resign; Takasu, deputy chief of
mission in Washington, to be next ambassador

ASAHI (Page 4) (Full)
June 27, 2007

The government yesterday informally decided to appoint Yukio Takasu,
currently minister at the embassy in Washington, to be the successor
to Ambassador to the UN Kenzo Oshima. Takasu's appointment will be
decided in a cabinet meeting in July.

Oshima has led Japan's UN diplomacy since November 2004. Although he
aimed at an adoption of a resolution calling for reform of the UN
Security Council along with three other countries, including
Germany, he gave up on the idea since the United Stated did not
support it. He made efforts to secure support from many counties for
a sanction resolution on North Korea's missile test last October.

Takasu entered the Ministry of Foreign Affairs in 1969. He has been
serving in the current post since August 2006, after having served
in such posts as director general of the International Cooperation
Division and ambassador in charge of US reform. The government will
review its strategy of requiring UNSC permanent membership under the
leadership of Takasu.

18) Upper House election: Pension issue tops list of public
commitments issued jointly by LDP and New Komeito; Specific argument
on constitutional revision not included

MAINICHI (Page 5) (Abridged)
June 27, 2007

The Liberal Democratic Party (LDP) and the New Komeito yesterday

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released a set of key policies as joint public commitments for the
upcoming Upper House election. The package of key policy proposals
focuses on the introduction of a card system starting in 2011, which
allows public pension contributors to check their pension
information at any time, following the missing pension premium
payment records. Regarding a revision of the Constitution, the main
focus of the prime minister's call for breaking free of the postwar
regime, due to resistance from New Komeito, which is alarmed about
the idea of revising Article 9, the report simply stated that a
"broad-based national discussion should be deepened."

Concerning the pension issue, the package stressed that efforts will
be made so that every eligible pensioner can receive his or her due
pension benefits. Though both parties' individual manifestos did not
include the introduction of a card system, it was incorporated in
the package following the prime minister's proposal for the
introduction of a personal number covering the pension and medical
services system.

Regarding a timeframe for revising the Constitution, the package
simply noted, "A Diet session in 2010 or after will be taken into
mind." The LDP's manifesto mentions the initiation of constitutional
revision in a Diet session in 2010. However, the New Komeito, whose
manifesto says "a bill adding clauses to the Constitution will be
drafted possibly in three years' time," was reluctant to mention a
specific timeframe.

The LDP-proposed wording "taking the lead in discussions by the Diet
Constitution Screening Council" has been changed to "deepen
discussions," with a senior New Komeito official noting, "Such words
will give the impression that the ruling parties will railroad the
bill through the Diet."

The prime minister has a strong desire to reform the public servant
system. The report notes that the lukewarm nature of trade unions
should be rooted out. Thus the package included proposals with a
strong awareness of opposition parties, which are supported by trade
unions.

19) Arguments over party leadership raised in ruling and opposition
camps; LDP's Kato criticizes Machimura faction; Minshuto warns
against optimism

TOKYO SHIMBUN (Page 2) (Full)
June 27, 2007

At a press conference yesterday, Koichi Kato, former secretary
general of the ruling Liberal Democratic Party (LDP), criticized
former Prime Minister Yoshiro Mori, a member of the Machimura
faction (Seiwakai), to which Prime Minister Shinzo Abe used to
belong, for saying that "there would be no need for the prime
minister to take responsibility in the event the ruling coalition
fails to keep its majority in the House of Councillors election."
Kato referred to the July 29 Upper House election at the press
meeting, saying, "There is one faction that historically has not
taken responsibility even if the party is defeated in the
election."

The LDP suffered a crushing defeat in the 1998 Upper House election.
Kato as secretary general along with Prime Minister Ryutaro
Hashimoto stepped down from their posts to take responsibility for
the loss. Referring to this, Kato commented about the Machimura

TOKYO 00002898 005 OF 007


faction:

"I though it was only natural for me to resign. It is tradition for
such factions with a strong sense of mainstream conservatism as
Kochikai (to which Kato used to belong) and Keiseikai (currently
Tsushima faction) to quit posts to take responsibility."

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In the 2004 Upper House election, then Prime Minister Junichiro
Koizumi, who belongs to Seiwakai (Machimura faction), did not step
down, although the number of votes obtained by the LDP was less than
that of Minshuto (Democratic Party of Japan).

Minshuto lawmakers are also talking about the responsibility of
President Ichiro Ozawa in case the party fails to force the ruling
coalition into a minority in the Upper House race.

Secretary General Yukio Hatoyama took this view at a press

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conference: "It is only natural that arguments for the president to
assume responsibility will come up if we fail to win. President
Ozawa should announce how he plans to take responsibility."

Appearing on a TV program, Supreme Advisor Kozo Watanabe clearly
stated: "Should the opposition fail to secure a majority, Ozawa will
resign as party president to assume responsibility."

The largest opposition party now senses that it has a good chance to
trade places with the ruling camp, seeing the results of recent
various opinion polls backed by the pension record management
fiasco. The arguments about Ozawa's responsibility are a part of
Minshuto's strategy to run against Prime Minister Shinzo Abe, who
has said, "I always assume the greatest responsibility."

The Minshuto leadership has warned party members not to assume the
party will win an easy victory. Observers see Watanabe's remarks as
a warning to Ozawa in preparation for a failure to score big gains
in the election.

However, Ozawa has yet to make his position clear about his
responsibility, just saying, "I will reveal my view sometime soon
before the election."

20) MSDF to remove personnel with foreign spouse from intelligence
posts

SANKEI (Top play) (Abridged)
June 27, 2007

In the wake of recent Aegis data leaks, the Maritime Staff Office of
the Maritime Self-Defense Force has now decided to transfer MSDF
personnel from their current workplaces to other sections in case
they have a foreign spouse and have access to highly confidential
information, such as information falling under the category of
"special defense secret" or "tokubetsu boei himitsu." There are
about 10 MSDF members who are subject to transfer. Their transfer
will be officially announced along with regular personnel changes
taking place in August and later. The United States, which is
Japan's ally, is turning a severe eye to Japan due to the leakage of
Aegis data. The decision this time is a desperate measure intended
to prevent classified information, which could undermine national
defense, from leaking to foreign countries.

According to an MSDF officer, the MSDF was under fire from the US

TOKYO 00002898 006 OF 007


Navy, US Forces Japan, and some US government officials for the
leakage of Aegis data. In order for Japan to recover the United
States' confidence, it is urgently necessary for Japan to
investigate the case and prevent such an incident from recurring.
The decision on their transfer can be taken as a measure for that
purpose.

The MSDF has a total of about 40,000 members. According to its
in-house survey, about 150 MSDF members are married to foreign
nationals. About 100 of them are Chinese, and about 50 are
Philippine, South Korean, or other foreign nationals.

The MSO will transfer about 10 personnel who are among those
personnel and are currently assigned to workplaces that can access
an extremely high level of classified information like defense
secrets, such as the structure and performance of vessels and

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airplanes provided by the United States.

21) Amendment to AML: Administrative surcharges, penalties not to be
unified; "Having two systems boosts constraint on violation of the
law," notes study council's report

MAINICHI (Page 2) (Almost full)
June 27, 2007

The Anti-Monopoly Law Basic Problems Discussion Council (chaired by
Tokyo University honorary professor Hiroshi Shiono), which reports
to the chief cabinet secretary, has looked into the possibility of
revising the Anti-Monopoly Law (AML) and released a report
yesterday. A major feature of the report is that it calls for
stricter application of the law, including strengthened
administrative surcharges to be imposed on companies that engaged in
bid-rigging activities. However, the panel decided not to unify the
administrative surcharge system and the criminal penalty system as
requested by Nippon Keidanren (Japan Business Federation). Since the
LDP has indicated a cautious stance toward strengthening
regulations, coordination of views for revising the AML will likely
encounter complications.

The report noted that having both systems would be appropriate, as
it boosts constraints on violation of the AML, declining a request
filed by Nippon Keidanren that the two systems should be unified
into the administrative surcharge system. Regarding the level of
administrative surcharges, the report said that surcharges should be
set at a level that discourages a motive to violate the law.
However, since surcharges were raised only in January last year, the
panel stopped short of making a specific proposal with Chairman
Shiono noting, "We will leave the setting of figures to government
officials and politicians to work out."

Regarding the umpire system, under which the Fair Trade Commission
(FTC) judges appeals against decisions it made, the report said, "It
is appropriate to maintain the current system for the time being."
The report thus turned down Nippon Keidanren's claim that it is
distrustful of the system of the FTC serve as an adjudicator and an
umpire,

Concerning exclusion-type private monopolization, meaning companies
shut out competitors from the market by such means as dumping, only
an order to stop an unfair practice can by issued under the existing
law. The report indicated a policy of applying the surcharge system
to such a practice.

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SCHIEFFER

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