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Cablegate: Japanese Morning Press Highlights 07/10/07

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RUALSFJ/COMUSJAPAN YOKOTA AB JA//J5/JO21//
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RUEHBJ/AMEMBASSY BEIJING 7803
RUEHUL/AMEMBASSY SEOUL 3863
RUCNDT/USMISSION USUN NEW YORK 4946

UNCLAS SECTION 01 OF 10 TOKYO 003130

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 07/10/07


Index:

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

Opinion polls:
4) Tokyo Shimbun's poll finds DPJ (Minshuto) outpacing the LDP with
voters in both the proportional and district seats; 53 % non-support
rate for Abe Cabinet
5) Kyodo trend poll: Asked which party they would vote for, 24 %
pick DPJ, 17 % select LDP
6) Asahi poll: 51 % of voters against raising the consumption tax;
40 % accept it as necessary

7) Assistant Secretary Hill to visit Tokyo at week's end

8) Foreign Minister Aso to travel abroad on June 30, the day after
the Upper House election, to the Philippines for ASEAN plus 3 and
ARF conferences

9) A shocking 77 % of Japanese negative about socializing with
foreigners in GOJ poll

Political affairs:
10) Prime Minister Abe evasive in his answers about Farm Minister
Akagi's money scandal, refusing to pursue accountability
11) DPJ to strengthen pursuit of Abe government on the Akagi scandal

12) Ozawa-influenced manifesto (election campaign promises) issued
by the opposition DPJ

13) Ministry of Internal Affairs and Communication sets policy
measures for dealing with the pension mess

14) Bulldog Sauce Company's defense measures against takeover by
Steel Partners backed by high-court decision

Articles:

1) TOP HEADLINES

Asahi & Sankei:
Criteria for accepting pension claims: Bank accounts, household
account books also to be used as evidence of payment

Mainichi & Yomiuri:
Tokyo High Court nixes Steel Partners' appeal over Bull-Dog's
takeover defense; Bull-Dog to exercise takeover defense tomorrow

Nikkei:
Third-party pension panel sets criteria for accepting pension
claims; Pension benefits likely to be paid to cases of "high
probability of premium payment"

Tokyo Shimbun:
Poll on Upper House election: DPJ dominates both proportional
representation blocs, electoral districts with disapproval rating
for Abe cabinet topping 50 %

Akahata:
Nation groaning under heavy tax burden for past six years with a

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5-trillion yen tax increase involving general public and a
4-trillion yen tax decrease toward big companies and wealthy people;
Nonetheless, hiking the consumption tax planned

2) EDITORIALS

Asahi:
(1) Aid to war-orphans: Don't disappoint them again
(2) Manifestos should show numerical targets

Mainichi:
(1) Government should compensate war-orphans for past hardships
(2) LDP, DPJ appear to dodge the question of hiking consumption
tax:

Yomiuri:
(1) Aid to war-orphans: Political decision led to early settlement
(2) Farm Minister Akagi's scandal: More detailed explanation
essential

Nikkei:
(1) Constructive policy debate backed by financial resources needed
(2) High court approves takeover defense

Sankei:
(1) More policy debate needed instead of talking about
responsibility for election results
(2) We welcome political decision to offer aid to war-orphans left
behind in China

Tokyo Shimbun:
(1) Aid to war-orphans: We want to see them welcomed home
(2) Defense white paper good study material for Defense Minister
Koike

Akahata:
(1) 2007 defense white paper: Overseas military operations put in
main duties without any restrictions

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, July 9

NIKKEI (Page 2) (Full)
July 10, 2007

09:04
Gave an interview at LDP headquarters.

12:00
Met LDP Secretary-General Nakagawa.

14:13
Met LDP Chief Deputy Secretary-General Motegi.

15:38
Met Chief Cabinet Secretary Shiozaki.

16:54
Met at the Kantei with Chairman Takeshi Noda and others of the
project team for supporting the livelihood of Japanese orphans left
behind in China in the closing days of WWII.

TOKYO 00003130 003 OF 010

17:55
Had a haircut at a barbershop in the Hilton Tokyo.

19:35
Returned to his official residence

4) Poll: DPJ ahead in proportional representation blocs, electoral
districts; Cabinet disapproval rating over 50 %

TOKYO (Top play) (Abridged)
July 10, 2007

Ahead of the upcoming House of Councillors election to be announced
July 12, the Tokyo Shimbun conducted a telephone-based nationwide
public opinion survey to probe public attitudes. In the survey,
respondents were asked which political party or which political
party's candidate they would vote for. In response to this question,
32.4 % chose the leading opposition Democratic Party of Japan
(Minshuto) for proportional representation, with the ruling Liberal
Democratic Party at 26.8 % . For voting in electoral districts as
well, the DPJ was above the LDP, with 31.4 % choosing the DPJ and
27.3 % favoring the LDP. In addition, about 70 % were critical of
Prime Minister Abe's handling of the pension issue and the
politics-and-money issue. The figure shows that these issues have
damaged the LDP.

In 2005, the House of Representatives was dissolved for a general
election over postal privatization. In the survey this time,
respondents were asked which political party they voted for at that
time in proportional representation. In response to this question,
42.1 % answered that they voted for the LDP. Among them, about 20 %
said they would vote for the DPJ both in their proportional
representation blocs and in their electoral districts. The LDP has
failed to retain many previous supporters.

The last election for the House of Councillors was held in 2004. In
that election as well, the DPJ garnered more votes than the LDP both
in proportional representation and in electoral districts. The
survey this time also posted a similar margin between the two
parties.

Meanwhile, respondents were also asked if they supported the Abe
cabinet. To this question, "no" and "no to a certain degree" totaled
53.4 % , with "yes" and "yes to a certain degree" adding up to 44.2
% . The nonsupport rate was nearly 10 points higher than the support
rate.

In the survey, respondents were also asked about the prime
minister's handling of the pension fiasco that was touched off by
the government's failure to keep pension records for as many as 50
million people. To this question, 67.8 % answered that they could
not trust the premier's response. Abe has so far replaced three of
his cabinet ministers over politics-and-money scandals and other
issues in his nine months in office. Asked about this fact, 62.5 %
answered that Abe has responsibility for his appointments of those
cabinet ministers. As seen from these two figures, the public is
turning a severe eye to Abe.

In the breakdown of public support for political parties, however,
the LDP stood at 39.9 % , with the DPJ at 21.2 % . The LDP is nearly
20 points higher than the DPJ. Asked which political party or which

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political party's candidate to vote for in proportional
representation blocs and electoral districts, more than 20 %
answered that they "don't know." Depending on the future situation,
the margin between the DPJ and the LDP could narrow.

5) Poll: DPJ stands at 24 % in pre-election popularity rating, LDP
at 17 %

TOKYO (Page 2) (Full)
July 10, 2007

Kyodo News conducted a telephone-based nationwide public opinion
survey on July 7-8 to probe trends in public attitudes toward the
July 29 election for the House of Councillors. In the survey,
respondents were asked which political party or which political
party's candidate they would vote for under the proportional
representation system. In response to this question, 24.6 % chose
the leading opposition Democratic Party of Japan (Minshuto), up 0.1
percentage point from the last survey conducted June 30 and July 1.
The DPJ sustains its good showing. The ruling Liberal Democratic
Party was at 17.6 % , down 0.3 point from the last survey. The
margin between the two parties widened, though slightly.

The approval rating for Prime Minister Shinzo Abe and his cabinet
was 30.1 % , down 1.9 points from the last survey. The Abe cabinet's
support rate renewed its all-time low since it came into office in
September last year. The disapproval rating for the Abe cabinet hit
an all-time low of 58.8 % , up 0.7 point.

In popularity rating for electoral districts, the DPJ stood at 23.3
% , up 0.4 point from the last survey. The LDP was at 19.8 % , up
0.6 point. As seen from these figures, the DPJ has a lead over the
LDP.

For proportional representation, New Komeito, the LDP's coalition
partner, scored 5.8 % , with the Social Democratic Party (Shaminto)
at 2.4 % and the People's New Party (Kokumin Shinto) at 0.2 % . No
respondents picked the New Party Nippon (Shinto Nippon). Those
undecided accounted for 41.6 % .

Polling methodology: The survey was conducted July 7-8 on a
computer-aided random digit dialing (RDD) basis. Among randomly
generated telephone numbers, those actually for household use with
one or more eligible voters totaled 1,786. Answers were obtained
from 1,256 persons.

6) Poll: 72 % want tax reform as campaign issue

ASAHI (Page 1) (Abridged)
July 10, 2007

An estimated 72 % of the nation's electorates want tax reform,
including the consumption tax, to be a point of contention in
campaigning for the upcoming House of Councillors election, with
only 13 % saying they do not think that way, the Asahi Shimbun found
from its recent telephone-based 9th serial public opinion survey
conducted July 7-8. As seen from these figures, a majority of the
nation's voting population think the political parties should
manifest their standpoints about the tax system, including the
consumption tax, in the run-up to the election. Respondents were
also asked if they thought the consumption tax should be raised. In
response to this question, 40 % answered "yes," with 51 % saying

TOKYO 00003130 005 OF 010


"no."

The government and ruling coalition plan to carry out a drastic
reform of the tax system, including the consumption tax, with an eye
to fiscal 2007. The ruling camp, however, will not make a campaign
issue of the tax system, as Prime Minister Abe has said specific
discussions would not be started until after this fall.

However, even among those who support the ruling Liberal Democratic
Party, 67 % want the election to focus on the tax system. The
proportion of those who want the tax system to become a campaign
issue was 82 % among those who support the leading opposition
Democratic Party of Japan (Minshuto) and 69 % among floating voters
with no particular party affiliation.

The proportion of those who want the tax system to become a campaign
issue in the House of Councillors election was 79 % among men and 66
% among women, while it was 13 % among men and also among women.
Among those in their 20s to 60s, the proportion of those seeking to
focus on the tax system was around 80 % . However, the figure was 49
% among those aged 70 and over.

7) Hill to arrive in Japan this weekend to pave way for six-party
talks to occur next week

YOMIURI (Page 2) (Full)
July 10, 2007

Final coordination is underway for US Assistant Secretary of State
Christopher Hill, the US chief negotiator in the six-party talks on
the North Korean nuclear issue, to visit Japan possibly this weekend
to confer with his Japanese counterpart, Kenichiro Sasae,
director-general of the Foreign Ministry's Asia and Oceanian Affairs
Bureau, on a plan to hold a session of the chief negotiators from
the six countries, one government official revealed yesterday.

According to this official, following his visit to Japan, Hill plans
to travel to South Korea and China and in South Korea to confer with
South Korean chief negotiator Chun Young Woo, director of the Office
of the Diplomatic Policy of South Korea's Ministry of Foreign
Affairs and Trade and in China to hold talks with Chinese Vice
Foreign Minister Wu Dawei. And staying in Beijing, Hill intends to
get a session of the six-party chief negotiators to take place
there.

In this regard, Chinese Assistant Foreign Minister Cui Tiankai was
asked by Japanese press corps at the Chinese Foreign Ministry
yesterday about when to hold the next round of talks of the chief
delegates from the six countries and said, "We have 20 or so days
before early August. It is fully possible to hold a session. We will
hold it once each country becomes ready." He thus revealed a strong
possibility of holding the session by the end of the month.

8) Foreign minister to set out on overseas trip on July 30, the day
after Upper House election

MAINICHI (Page 5) (Full)
July 10, 2007

Foreign Minister Taro Aso decided yesterday to visit the Philippines
from July 30, the day after the House of Councillors election,
through August 3. He will attend the foreign ministerial meeting of

TOKYO 00003130 006 OF 010


ASEAN+3 and a meeting of the ASEAN Regional Forum.

Aso is expected to exchange views on economic partnerships with
Southeast Asia, the situation on the Korean Peninsula, and other
issues. Depending on future moves by North Korea, a foreign
ministerial of the six-party talks might be held.

Many observers anticipate an uphill battle for the ruling camp in
the Upper House election on July 29. Prime Minister Shinzo Abe might
be forced to resign if the ruling camp suffers a defeat. Foreign
Minister Aso has been viewed as a possible successor. Attention is
being focused on how his absence at such a crucial time will affect
the political situation after the election.

Coordination is also underway for Aso to make a round of visits to
the Middle East and Latin America Aug. 12-25. But this trip may be
aborted, depending on the election results.

9) Poll: 77 % Japanese "negative" about mingling with foreign
residents

TOKYO SHIMBUN (Page 3) (Full)
July 10, 2007

In a survey conducted and revealed yesterday by the Ministry of
Land, Infrastructure and Transport, 56 % of foreigners surveyed but
only 10 % of Japanese respondents expressed eagerness about
socializing between foreigners living in Japan and local residents.

The survey was conducted from December of last year through early
this January on residents in 16 areas in Ibaraki, Gunma, Tochigi,
and Saitama, where a number of foreigners live. Replies were
collected from 738 foreign households and 1,104 Japanese
households.

On nationality, Brazilians accounted for 49 % , followed by
Peruvians with 14 % , Chinese with 12 % , and Vietnamese with 10 % .
Their average length of stay in Japan was 8.7 years.

Among the foreign respondents, 5 % said, "Mingling with Japanese is
unnecessary," and 26 % said, "The minimum is enough in our lives."
These negative replies made up 31 % . Persons eager to learn the
Japanese language accounted for 87 % , and 73 % said they wanted to
continue to live in the same area.

Of the Japanese residents surveyed, 23 % said, "There is no need,"
and 54 % said, "The minimum is enough in our lives." These negative
replies reached 77 % .

The ministry cites "little opportunity for interchange with
foreigners" as the main reason for Japanese residents' lack of
eagerness to socialize with foreigners. It stresses the need for a
system to promote interchange between foreigners and local
residents.

According to the ministry, the number of foreign residents was about
2.085 million at the end of 2006, an increase of about 670,000, or
47 % over the level in 1996.

10) Abe remains tongue-tied on office expense issue

TOKYO SHIMBUN (Page 2) (Excerpts)

TOKYO 00003130 007 OF 010


July 10, 2007

Prime Minister Shinzo Abe remained inarticulate about the
questionable bookkeeping of office expenses by Agriculture, Forestry
and Fisheries Minister Norihiko Akagi, indicating that he would not
urge the farm minister to produce receipts. Although Abe wants to
demonstrate a resolute stance regarding the politics-and-money issue
in order to dispel public distrust once and for all, he cannot do so
because of two shackles. Whether or not he can quell public
criticism before the July 29 House of Councillors election remains
to be seen.

The first shackle is that he allowed former Administrative Reform
Minister Genichiro Sata, Education, Science and Technology Minister
Bunmei Ibuki, and former MAFF Minister Toshikatsu Matsuoka, who
committed suicide, to refuse to produce receipts when their massive
office expenses came to light.

As the grounds, all those lawmakers cited the unrevised Political
Funds Control Law that did not obligate political organizations to
attach receipts to their financial statements, including office
expenses.

Opposition parties demanded the production of receipts, but the
cabinet ministers consistently refused to do so. Abe did not press
them to, either.

Pressuring Akagi for receipts might reignite the issue of the
questionable office expenses of Matsuoka and others.

In yesterday's press interview, Abe reiterated that there was no
need to produce receipts, saying, "(Mr. Akagi) explained his office
expenses quite precisely."

Another shackle is that the revised Political Funds Control Law that
cleared the Diet in the previous session requires fund-management
organizations to attach receipts to their fund reports for every
item costing 50,000 or more.

11) Minshuto beefing up pursuit on Akagi over political funds
scandal

NIKKEI (Page 2) (Full)
July 10, 2007

In criticizing Agriculture, Forestry and Fisheries Minister Norihiko
Akagi over a political funds scandal, Democratic Party of Japan
(Minshuto) President Ichiro Ozawa said in a press briefing
yesterday: "It is irrational for him to insist that there was no
fictitious accounting of costs but say that he cannot explain."
Akagi's political organization has registered the home of his
parents as its office but has recorded in its political funds
reports huge amounts of money as office expenses.

Meanwhile, Akagi told reporters after a meeting at the Prime
Minister's Official Resident last night: "We have properly reported
and publicized a total amount of expenses incurred. There should be
no problem since there has been no fictitious booking of costs." He
indicated he would not disclose receipts. He also stated that he
would give a detailed explanation in a press briefing after a
cabinet meeting today.


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In a press conference yesterday, Minshuto Policy Research Council
Chairman Takeaki Matsumoto cited the revised Political Funds Control
Law (proposed by the ruling camp), which was adopted in the latest
ordinary Diet session: "Only political funds management
organizations are targeted under the law. But this (Akagi) case has
exposed that there is a problem with this," indicating he would make
this problem central in the House of Councillors election campaign.

Prime Minister Abe emphasized last evening: "The revised law was
enacted after thorough debate in the ruling camp." Asked about the
possibility of another revision of the law, though, Abe replied: "If
necessary, such discussion should be conducted."

12) Minshuto manifesto features Ozawa in last battle

ASAHI (Page 4) (Abridged slightly)
July 10, 2007

The major opposition Minshuto (Democratic Party of Japan) unveiled
yesterday its manifesto (campaign pledges) for the upcoming House of
Councillors election, carrying four pages of pictures of Ichiro
Ozawa, its president. The manifesto is apparently aimed at featuring
the "last battle" of Ozawa, who had declared that he would retire
from politics if the opposition camp failed to win a majority in the
upcoming election.

The 32-page manifesto that begins with a close-up of Ozawa's face
spells out "three promises" of pension, child-rearing, and
agriculture, and seven major proposals on employment,
decentralization, and other matters. It also plays up Ozawa's
visions, such as that people's livelihood should come first and that
a two party-system should be installed. The manifesto also contains
a picture-studded section on Ichiro Ozawa, explaining his background
from the assumption of office as Liberal Democratic Party secretary
general at age 47, the establishment of the Hosokawa administration
after leaving the LDP, formation of the New Frontier Party and the
Liberal Party, to current position as Minshuto president. This is
the first Minshuto manifesto that has carried so many photos and
detailed information on the background of its party.

Three promises

1. The government will receive pension benefits in full in a
responsible manner.
2. The party will introduce a child-rearing allowance system to pay
26,000 yen for each child.
3. The party will establish an income compensation system to cover
every farmer.

Seven proposals

1. Ensure employment to rectify national socioeconomic disparities.
2. Eliminate a lack of doctors to create a solid medical system.
3. Eliminate wasteful administrative spending.
4. Realize decentralization.
5. Revitalize medium and small companies in order to breathe new
life into the Japanese economy.
6. Japan will play a leading role in the global environment.
7. Achieve proactive diplomacy.

13) Pension benefits may be paid without data, according to judgment
standards for cases of missing records; third-party committee does

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not specify penalty for false claims

TOKYO SHIMBUN (Page 1) (Excerpts)
July 10, 2007

Following pension premium payment record-keeping errors caused by
the Social Insurance Agency (SIA), the Ministry of Internal Affairs
and Communications has set up a Central Third-Party Committee to
Confirm Pension Premium Payment Records, a panel that will determine
whether to pay pension benefits to claimants who have no documents
that prove their premium payments, such as receipts. The panel
yesterday adopted basic guidelines for decisions and indicated
expected cases in which benefits can be paid. A feature of the
guidelines is to allow correction of pension amounts in cases in
which premium payments can be inferred from claimants' bank books
and household records. Even if there is no such data at all, if a
request to correct pension amounts is apparently not unreasonable
and seems reliable to a certain extent, payments will be generally
approved.


Guidelines lack certainty

(Commentary) The panel yesterday adopted judgment guidelines, under
which pension benefit payments will be approved even if there is no
evidence proving premium payment, if requests for correction of
pension amounts "appear reasonable to a certain degree." Behind the
decision is the government's intention to head off discontent by
indicating the possibility of widely paying benefits.

The guidelines do not place absolute value in SIA pension records,
which may be good news for contributors with no payment data.
However, since the job of judging the propriety of paying benefits
will be left to screeners, the possibility of arbitrary decisions
has not been completely ruled out.

14) Steel Partners an "abuser" of M&As: Tokyo High Court declares
Bull-Dog Sauce defense measures legal

YOMIURI (Top Play) (Excerpts)
July 10, 2007

In an appeal filed by Steel Partners Japan Strategic Fund, a US
investment fund, seeking an injunction barring Bull-Dog Sauce Co.,
the largest sauce maker in Japan, from implementing a takeover
defense measure, the Tokyo High Court yesterday rejected its request
and decided that the defense measure is legal. The court identified
Steel Partners as an "abuser" of M&As that would destroy corporate
value and judged that the sauce maker's defense measure is
legitimate. It also said that the idea of taking into account only
the profits of shareholders is unacceptable.

High court warns against only pursuing profit

The decision by the Tokyo High Court will likely have a major impact
on M&As. The court made two noteworthy assertions.

First, concerning the question of to whom a company belongs, the
court pointed out: "The idea of solely pursuing stockholders'
profits has its limitations and is therefore unacceptable." It thus
made its decision clear to curb the move of takeover bidders
excessively brandishing stockholders' rights, such as Livedoor and

TOKYO 00003130 010 OF 010


Murakami Fund did.

A joint-stock corporation is owned by shareholders, but the company
cannot be managed without support from employees, business partners,
and consumers. The court decision noted that companies should
enhance corporate value, while taking into consideration their
inseparable relations with various stakeholders and confirmed that
perception from a judicial standpoint.

Second, the court pointed out the dichotomy that occurs when
investment funds carry out M&As.

It noted that Steel Partners is pursuing its own profits instead of
the management of the targeted company, describing it as a company
that is responsible for giving priority to customer benefits due to
its organizational nature as an investment fund. It then described
the fund as "abuser" of M&As based on its analysis of its past M&A
activities.

The court decision, of course, does not say that all investment
funds are abusers of M&As. However, investment funds will be held
accountable more severely in the future regarding how they intend to
improve the management of targeted companies.

SCHIEFFER

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