Cablegate: Japanese Morning Press Highlights 07/24/07

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UNCLAS SECTION 01 OF 09 TOKYO 003362

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 07/24/07

Index:

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

Defense and security:
4) Defense Ministry plans to develop stealth technology, eyeing
fifth generation Japan-built fighter aircraft
5) Defense Ministry's aim in planning to develop own stealth fighter
may be to extract compromises from US
6) Construction at Iwakuni to allow for transfer of carrier-based
fighters from Atsugi will not start until 2010: US Navy commander in
Japan

Election prelude:
7) Growing chorus of LDP voices saying no need for Abe to step down
as prime minister regardless of election outcome
8) Close coalition between LDP, New Komeito at the top but
disharmony between the two parties at the election campaign level
9) Prior voting in the Upper House election running 1.5 times higher
than last time, with 4 million absentee voters in 10 days

Earthquake damage:
10) Tally for Chuetsu Earthquake damage now estimated to run 1.5
trillion yen
11) Earthquake revealed structural defects at the Kashiwazaki-Koriya
nuclear plant

12) Police arrest gangsters involved in human trafficking of
Japanese women

13) Foreign Ministry to set up maritime diplomacy policy
headquarters

14) Government plans tax revisions that would allow economy-of-scale
farming

Articles:

1) TOP HEADLINES

Asahi:
Kashiwazaki nuclear power plant: 2,000 tons of water seep under
reactor

Mainichi:
Nippon Express, Yamato Transport, and Seino Transportation to hold
shares mutually to counter postal privatization

Yomiuri:
Irrecoverable credits from pension-fund-financed resort facilities
amount to 1 trillion yen: Sun-Peer Komatsu built at cost of 5.4
billion yen and sold for 800 million yen;

Nikkei:
Government plans to revise tax system for consolidation of farmland

Sankei:
Upper House election campaign going astray: Who will benefit from
this?

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Tokyo Shimbun:
Damage from Niigata earthquake estimated at 1.5 trillion yen:
Suspension of nuclear power plant incur loss of 700 billion yen

Akahata:
Determined to secure five seats in proportional representation and
election of Tamura in electoral district; JCP Chair Shii stumps in
Shinjuku, Tokyo

2) EDITORIALS

Asahi:
(1) Education and Upper House election: Nail down true essence of
Abe-style reform
(2) Hostages in Afghanistan: We hope kidnapped Koreans will be
released

Mainichi:
(1) Both LDP and DPJ avoiding constitutional revision issue
(2) Lawsuit over excessive interest: Lenders to bear heavier
liability

Yomiuri:
(1) Foreign policy and security: Discussion of peace and security
flat
(2) General election in Turkey: Secularism hits a wall

Nikkei:
(1) IAEA is not rescue organization to secure safety at nuclear
power plant
(2) Lessons of auto-parts-maker Riken

Sankei:
(1) Final stage of Upper House election campaign: Concern about lack
of policy discussion
(2) IAEA inspection of nuclear power plant: Beneficial, but don't
hope for too much

Tokyo Shimbun:
(1) Politics and money: Cabinet ministers should clear the air
(2) IT society: Japanese technology lacking international
competitiveness

Akahata:
(1) Small and medium-sized businesses: Realize stable management by
ending poverty

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, July 23

NIKKEI (Page 2) (Full)
July 24, 2007

07:00
Left Haneda Airport on ANA Flight 3711.

08:22
Arrived at Kumamoto Airport. Met with Education Minister Ibuki
aboard the plane.

09:22

TOKYO 00003362 003 OF 009

Met with Kumamoto Gov. Shiotani at Misato Town Hall. Inspected the
area devastated by heavy rains.

10:11
Gave words of encouragement to disaster victims at facility for the
elderly.

11:02
Arrived at the LDP Kumamoto Hall in Kumamoto City.

11:26
Delivered street speech at Karashima Park.

13:53
Gave street speech at the south exit of JR Saga Station.

16:13
Delivered stump speech at Shimase Park in Sasebo City.

18:06
Stump speech in Nagasaki City.

19:12
Arrived at Nagasaki Airport and met with Finance Minister Omi.

19:55
Left Nagasaki Airport on ANA Flight 3742.

21:21
Arrived at Haneda Airport.

21:57
Attended election strategy meeting at LDP headquarters.

23:08
Returned to his official residence.

4) Defense Ministry to develop prototype stealth fighter to test
technologies

YOMIURI (Page 1) (Full)
July 24, 2007

The Defense Ministry decided yesterday to include in its fiscal 2008
budgetary request funds to develop a manned prototype
fifth-generation fighter jet equipped with stealth capabilities and
other advanced technologies. With the production of F-2 support
fighters, jointly developed by Japan and the United States,
scheduled to end in FY2011, the ministry apparently plans to
maintain the foundations for future technological development.

The ministry, by showing interest in developing jet fighters
domestically, hopes to gain an edge in negotiations with the United
States next summer when it selects Japan's next-generation mainstay
combat aircraft (FX).

According to the ministry, the envisioned prototype would be
equipped with stealth technology and other advanced electronics that
would make the plane difficult to detect by radar. As the prototype
would not be installed with radars and weaponry, it is expected to
be smaller than real fighter jets. The prototype is likely to be
developed over about a 10-year period at an estimated cost of

TOKYO 00003362 004 OF 009

several tens of billions of yen.

The ministry has in principle purchased fighters from the United
States in terms of costs and performance. The F-22 Raptor is
considered to be one of the leading candidates for the ministry's
next fighter jet request to the United States, though US law
currently prohibits export of the stealth fighter and the US
government therefore cannot provide information on the Raptor to the
ministry.

The cost and capabilities of any domestically produced fighter would
have to be thoroughly studied if full scale development is to take
place. For this reason, the ministry has decided to develop a manned
prototype first to prove technologies.

5) US concessions eyed behind plan to develop prototype stealth
fighter

YOMIURI (Page 1) (Abridged slightly)
July 24, 2007

Commentary

Japan has not developed a domestic fighter since the F-1 support
fighter jet in the 1970s. The idea of developing a domestically
produced fighter was originally floated while the government was
selecting an FSX plane to succeed the F-1, but Japan-US trade
friction led the government to bend to US wishes on the issue. As a
result, the two governments decided to jointly develop the F-2
support fighter jet. F-15 fighter jets, which form the core of the
country's fighter force, are being manufactured in the country under
a license agreement by which the government pays patents fees to and
receives technical guidance from the United States for production.

Against this backdrop, some ministry officials have called for the
development of domestic fighter jets as domestic technological
development would otherwise come to a standstill when production of
F-2 fighter jets ceases. Japan has expertise in advanced
electronics, stealth materials and aviation control equipment, but a
senior ministry official said because Japan does not have experience
in assembling fighter aircraft from scratch, its fighter jets would
not be effective as US warplanes.

Some ministry officials argue that since domestic fighters have not
been considered as a candidate for the next FX fighter jet, the US
government would not be swayed by the ministry's negotiation
strategy of parlaying its interest in developing domestic fighter
jets to win concessions from the US government, including discounts
and a review of its domestic law.

It also is unclear whether the production of a prototype would
eventually lead to the development of domestic warplanes.

Developing fighter jets is hugely expensive, as evidenced by the
more than 320 billion yen allocated for the development of the F-2
support fighter jet, a budget that far exceeded earlier estimates.

It is also unclear if the aircraft can have sufficient
capabilities.

As the US government could be reluctant to see warplanes
manufactured in Japan, some observers argue the ministry should

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produce only a prototype for the time being.

6) Kelly reveals plan to begin construction work at Iwakuni in 2010
for relocating carrier-borne aircraft from Atsugi

TOKYO SHIMBUN (Page 3) (Full)
July 24, 2007

Rear Adm. James Kelly, commander of US naval forces in Japan,
revealed in his meeting with reporters yesterday a plan to produce
an official plan by the end of fiscal 2008 on the planned relocation
of carrier-borne aircraft from the US Navy's Atsugi base in Kanagawa
Prefecture to the Iwakuni base in Yamaguchi Prefecture to start
building necessary facilities at the Iwakuni base in 2010.

Commander Kelly is in charge of the relocation plan. In May 2006,
Japan and the United States produced a final report on the
realignment of US forces in Japan specifying that the relocation
must be completed by 2014. No specific timetable for the relocation
was revealed, however.

As challenges for the relocation, Kelly cited: (1) establishing
airspace for training near the Iwakuni base, and (2) securing space
for facilities, aircraft hangars, and housing on the Iwakuni base
where 95% is already in use. The commander said: "We would like to
produce rough plans by the end of this year to push ahead with the
relocation speedily after obtaining concurrence of USFJ and the
Japanese government."

7) "Even if LDP loses Upper House race, prime minister will not step
down," many LDP members say

TOKYO SHIMBUN (Page 2) (Full)
July 24, 2007

While the observation is growing that the ruling coalition will
likely lose its majority in the House of Councillors, yesterday some
in the ruling Liberal Democratic Party (LDP) raised the view that
Prime Minister Shinzo Abe should stay in office even if the ruling
camp is defeated in the July 29 Upper House election.

Former Prime Minister Junichiro Koizumi delivered a speech in the
city of Kagoshima, in which he emphasized, saying:

"I want Mr. Abe to stick it out. He would be criticized if he quits
his job when he is at the bottom. I want him to fulfill his duty,
thinking of it as test of his character."

Yoshimi Watanabe, state minister in charge of administrative reform,
also stated:

"The prime minister will not step down from his post because of the
outcomes of the Upper House election. The view that he should resign
is an old notion that existed during the period of the medium-size
electoral system."

Watanabe also indicated the possibility of Abe dissolving the House
of Representatives in the fall or later, noting, "Should he fail to
manage his government in the end, voters would choose the party they
feel should hold the reigns of government."

8) 2007 Upper House race: LDP-New Komeito cooperation deepens, while

TOKYO 00003362 006 OF 009

there is discord at election sites

TOKYO SHIMBUN (Page 2) (Excerpts)
July 24, 2007

The ruling Liberal Democratic Party (LDP) and its coalition partner
New Komeito set up "districts for election cooperation" for the
first time, aiming at stepping up their election cooperation.
However, the more they strengthen their solidarity, the more discord
deepens between the two parties.

Since the LDP and New Komeito formed a coalition government in 1999,
the two parties have joined hands in three House of Representatives
elections and two House of Councillors races.

In the past elections, the New Komeito recommended LDP candidates
running in electoral districts where it did not field its own
candidates, while the LDP backed the New Komeito in the
proportional-representation segment.

In the upcoming Upper House election, the New Komeito has
recommended LDP candidates running in constituencies other than five
prefectural districts where the party has fielded its own
candidates, and the prefectures of Ibaraki and Miyazaki.

Meantime, the LDP Gunma and Kumamoto chapters have gone beyond
simply exhorting supporters to vote for New Komeito in proportional
representation and have actually recommended specific New Komeito
candidates. The LDP Oita and Kagoshima chapters have supported the
New Komeito's proportional representation candidates.

It is extremely unusual for the LDP to recommend or support
candidates of other parties in the proportional representation
section of the election.

The secretaries general of the two parties agreed to designate the
Aichi, Saitama, and Chiba prefectural districts (each with three
seats) as election cooperation districts. The LDP supports the New
Komeito in the Aichi and Saitama districts, in which both parties
fielded their own candidates, while the New Komeito backs the LDP in
the Chiba district, in which the LDP filed two candidates, aiming to
win two seats by the two parties.

The reason for the LDP and New Komeito stepping up cooperation is
that the ruling coalition is facing an uphill battle due to the
plunge in support for the cabinet of Prime Minister Shinzo Abe.

However, there is discord among candidates.

9) Interim tally: 4 million voters -- 1.5 times previous Upper House
election -- already cast ballots in 10 days

YOMIURI (Page 2) (Full)
July 24, 2007

The Ministry of Internal Affairs and Communications yesterday
released its interim tally of the number of voters who have already
cast their ballots for the July 29 House of Councillors election. A
total of 3,999,300 voters cast ballots in the 10 days from July 13
through 22 across the nation. Compared with the figures of the 2004
Upper House race, the total is up 54%. If this pace continues, it is
certain that the final number of voters who vote early will exceed

TOKYO 00003362 007 OF 009

the 7.17 votes cast in the previous election.

Looking at each prefecture, in Tokyo 366,826 voters -- the largest
number nationwide --cast their votes, followed by 275,398 in Osaka,
and 269,768 in Kanagawa Prefecture.

Compared with the numbers of the interim tally in the previous
election, the number of early voters was up 4.06-fold -- the highest
-- in Gunma Prefecture, followed by 2.2-fold in Toyama, and
2.16-fold in Okinawa. However, the number of voters decreased in
Kochi and Miyazaki Prefectures due probably to the recent typhoon.

Early voting will be conducted until July 28, the eve of the Upper
House election, from 8:30 a.m. through 8:00 p.m. at early polling
stations in municipalities across the nation.

10) Niigata earthquake caused 1.5 trillion yen damage, of which 700
billion yen related to suspension of nuclear power plant

TOKYO SHIMBUN (Top play) (Excerpts)
July 24, 2007

The Niigata prefectural government yesterday said that the recent
earthquake that hit Niigata Prefecture has caused damage to the
prefecture estimated at some 1.5 trillion yen, nearly half of which
is linked to the temporary suspension until next March of Tokyo
Electric Power Company's (TEPCO) Kashiwazaki-Kariwa nuclear power
plant.

The prefectural government explained that "TEPCO's estimated damage
has been included to show how much impact a disaster that occurred
in an area housing a nuclear power plan would have on the
prefecture." In addition, some 100-200 billion yen is estimated as
damage caused by harmful rumors about nuclear power plant troubles,
demonstrating how serious it is once a disaster hit a nuclear power
plant.

A man who was seriously injured in an accident that occurred in a
factory soon after the earthquake died yesterday, increasing the
number of deaths to 11.

The prefectural government has estimated damage to commerce and
industry, such as tourism, at 300 billion yen, buildings and plants,
including housing, at 200 billion yen, infrastructure, such as roads
and railways, at 70 billion yen, agriculture, fisheries, and
forestry, such as the fisheries industry, at 40 billion yen, and
lifelines, such as water and gas, at 10 billion yen.

11) Chuetsu earthquake: Building accommodating no. 6 nuclear reactor
at Kashiwazaki nuclear plant found to have structural defects; Water
leakage not anticipated

YOMIURI (Page 1) (Excerpt)
July 24, 2007

Water stored in a pool for spent fuel from no. 6 nuclear reactor at
Tokyo Electric Power Co.'s (TEPCO) Kashiwazaki-Kariwa nuclear power
plant spilled out in the Chuetsu Earthquake in Niigata Prefecture,
causing part of the water containing radioactive substance to leak
out into a non-control area and to be released into the sea. The
Nuclear and Industrial Safety Agency (NISA) yesterday came up with
the estimation that there were some structural defects on the 4th

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floor of a building accommodating the nuclear reactor, where the
pool in question was installed. NISA Director General Yasuhisa
Komoda inspected the nuclear plant the same day and pointed out that
there were many things that need improvement, including the fire
safety system and the communication system in the event of leakage
of radioactive substance." He indicated an outlook that it would
take a fairly long time before the nuclear power plant can resume
operation, noting, "It is not yet the time to consider resuming
operation."

12) Gang member and others arrested on charges of human trafficking
involving Japanese women in Tochigi Prefecture

ASAHI (Page 35) (Full)
July 24, 2007

The Tochigi Prefectural Police yesterday said that on July 21, they
arrested four people, including a gangster, on charges of human
trafficking for selling a Japanese woman from one adult
entertainment shop to another, and that they sent them to the
Utsunomiya District Public Prosecutors Office's Tochigi Branch on
the same charges yesterday.

It is the first time since the establishment of the Human
Trafficking Law in July 2005 that the police detected a human
trafficking case in which the victim has been a Japanese woman.

The people who have been set to the prosecutors are Wataru Kurihara
(26), a member of a gang affiliated with the Sumiyoshi-kai crime
syndicate and a manager of an adult entertainment shop, who lives in
Nishigo in Moka City, Tochigi Prefecture; Minoru Kimura (24) of no
fixed address, a former chief of an adult entertainment shop; Lee
Min Yong (38) of South Korean nationality, a manager of an adult
entertainment shop, who lives in Oyama in Oyama City in the
prefecture; and Yuzuru Saito (29) of no fixed address, a member of a
gang affiliated with the Sumiyoshi-kai crime syndicate and a manager
of an adult entertainment shop.

According to the police investigation, Kurihara and Kimira are
suspected of having sold a woman (who was then 21) working at a
sex-related business run by Kurihara to suspects Lee and Saito at a
price of over one million yen. Lee is suspected of having bought the
women in order to have her work at a sex shop he ran.

13) Policy headquarters established in Foreign Ministry apparently
to check Land Ministry

NIKKEI (Page 2) (Full)
July 24, 2007

With the Basic Law of the Sea aimed at reducing red tape in
policy-making taking effect on July 20, the Ministry of Foreign
Affairs (MOFA) established a Foreign Policy Headquarters on the Sea,
which is headed by Vice Foreign Minister Shotaro Yachi. The
secretariat chief of the headquarters is the director-general of the

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Economic Affairs Bureau. This new office consists of some 20 bureau
director-general-level members.

A Comprehensive Policy Headquarters on the Sea composed of officials
from government ministries, including MOFA, the Defense Ministry,
and the Ministry of Land, Infrastructure and Transport (MLIT), was
also set in motion. The chief of this office is the prime minister,

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with the posts of deputy chiefs assumed by the chief cabinet
secretary and the minister of land and infrastructure and transport.

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The foreign minister joins the office as a member, a status lower
than the deputy chief.

MOFA says it intends to engage in policy-making in view of
international law and treaties, but some believe that MOFA
established its new headquarters to check the MLIT.

14) Government plans to revise tax system for consolidation of
farmland

NIHON KEIZAI (Top Play) (Excerpts)
July 24, 2007

The government has started looking into the possibility of revising
preferential tax measures concerning inheriting and transferring
farmland with the aim of promoting the effective use of farmland.
Under the plan, those who inherit farms and do not plan to continue
farming will be exempt from taxes if they lease the land to large
operators. The aim is to promote large-scale farming. The government
will apply no preferential tax measures on unused farmland in order
to encourage effective use of farmland, which is lower than foreign
countries, through the tax system. It will strengthen the
international competitiveness of Japan's agriculture by enhancing
its productivity.

The Ministry of Agriculture, Forestry and Fisheries (MAFF) will
incorporate revisions of the preferential tax system for farmland in
its tax reform requests for fiscal 2008 for detailed discussions by
the government's Council on Economic and Fiscal Policy and the Tax
Research Commission reporting to the prime minister.

Under the current preferential measures for the inheritance tax,
inheritors of farmland are given a moratorium and exemption from
taxes if they continue operations for 20 years. Under the envisaged
preferential tax system, inheritors would be eligible for
preferential measures even if they do not maintain operations,
provided that they lease their farmland to large operators. The
definition of large operators eligible for this scheme is collective
operators with more than 20 hectares of farmland and individual
farmers with more than 4 hectares of farmland.

The government envisages that this measure would boost the leasing
of farmland by part-time farmers who have difficulty finding heirs
to take over their households, accelerating the consolidation of
farmland under large-scale farmers.

SCHIEFFER

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