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Cablegate: Daily Summary of Japanese Press 10/04/07

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PP RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #4666/01 2770808
ZNR UUUUU ZZH
P 040808Z OCT 07
FM AMEMBASSY TOKYO
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RHHMUNA/HQ USPACOM HONOLULU HI
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RHMFIUU/HQ PACAF HICKAM AFB HI//CC/PA//
RHMFIUU/USFJ //J5/JO21//
RUYNAAC/COMNAVFORJAPAN YOKOSUKA JA
RUAYJAA/CTF 72
RUEHNH/AMCONSUL NAHA 5961
RUEHFK/AMCONSUL FUKUOKA 3549
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RUEHBJ/AMEMBASSY BEIJING 9344
RUEHUL/AMEMBASSY SEOUL 5399
RUCNDT/USMISSION USUN NEW YORK 6259

UNCLAS SECTION 01 OF 12 TOKYO 004666

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: DAILY SUMMARY OF JAPANESE PRESS 10/04/07


Index:

(1) US deputy director of operations: "We'll make efforts to
disclose information about vessels that have received MSDF's
refueling services" (Yomiuri)

(2) High-level official of US Central Command on MSDF refueling: "We
were not given instructions that it was to be used only for OEF"
(Mainichi)

(3) Government again seeks justification for refueling operations
(Asahi)

(4) Interview with Foreign Minister Masahiko Komura: Ruling camp
will discuss issue of continuing refueling mission in fair and
square manner (Tokyo Shimbun)

(5) Interview with Defense Minister Ishiba: Suspension of MSDF
refueling will cause trouble to other countries (Tokyo Shimbun)

(6) Editorial: Prime minister's Diet reply on refueling mission
disappointing (Asahi)

(7) Tug-of-war between LDP, DPJ ahead of questioning sessions by
party representative (Tokyo Shimbun)

(8) Editorial: Can DPJ show capability to run government? (Nikkei)

(9) Editorial: Can North Korea keep its promises as mentioned in the
six-party agreement? (Tokyo Shimbun)

(10) Editorial: Consideration must be given to ordinary shareholders
in triangular mergers (Nikkei)

ARTICLES:

(1) US deputy director of operations: "We'll make efforts to
disclose information about vessels that have received MSDF's
refueling services" (Yomiuri)

YOMIURI ONLINE NEWS (Full)
October 4, 2007, 11:08 a.m.

Aya Igarashi, Washington

Robert Holmes, deputy director of operations for US Central Command,
was asked yesterday about the possibility that Japan's Maritime
Self-Defense Force (MSDF) might have indirectly refueled a US
carrier that was engaged in the Iraq campaign and made this comment:
"I am well aware that that matter has been a topic for debate in
Japan. We on the part of US military officials will work together
with Japan so as to provide reliable information to Japan." Holmes
emphasized his intention to make efforts to disclose information
about activities of the vessels that have received refueling
services.

When asked whether there have been cases of vessels being refueled
indirectly, Holmes said: "I do not say information showing such
cases does not exist but I am saying I don't know." In response to a
question asking whether there was any specific order prohibiting
fuel provided by the MSDF from being converted for the Iraq war,
Holmes said only this: "I don't know."

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(2) High-level official of US Central Command on MSDF refueling: "We
were not given instructions that it was to be used only for OEF"
(Mainichi)

MAINICHI ONLINE NEWS (Full)
October 4, 2007, 11:08 a.m.

Hiroaki Wada, Washington

Robert Holmes, deputy director of operations for US Central Command,
yesterday met with the press in Washington, and when asked whether
an order has been issued that US vessels that receive refueling
services from Japan's Maritime Self-Defense's (MSDF) vessels in the
Indian Ocean should be limited to those vessels that would
participate in Operation Enduring Freedom (OEF), Holmes said, "I am
not aware of such an order." The MSDF has provided oil mostly to US
vessels, but criticism has been made that the oil provided might
have been diverted to the Iraq war.

In reference to the question of diversion, Holmes said: "I know it
has become a topic for debate in Japan. I am also aware of the
importance of the issue." Noting that information about fuel
provided by the MSDF "should be made open to the public and should
not be made an issue (between Japan and the US)," Holmes indicated
his intention to transmit relevant information in detail to the
Japanese side.

On Japan's refueling operations, Holmes commented, "They are very
important, and nations (participating in OEF) have appreciated
them." While saying, "As a serviceman, I should refrain from making
any comment on a political debate in each country as to what should
be provided in (the war on terrorism)," Holmes expressed a strong
hope that Japan will continue its mission.

The US Central Command is responsible for military operations going
on in Iraq, Afghanistan, and their nearby areas.

(3) Government again seeks justification for refueling operations
(Asahi)

ASAHI (Page 3) (Abridged)
October 3, 2007

The war on terrorism, now underway in and around Afghanistan by the
US-led coalition of the willing, was launched by the United States
in "self-defense" following 9/11. At that point, Japan did not have
any legislation to provide rear-area support for such a war. Japan
established in 2001 the Antiterrorism Special Measures Law, a
time-limited law, based on a UN Security Council resolution. The UN
resolution, however, does not directly refer to the operations in
which Japan is taking part. The government is studying new
legislation despite the fact that the Democratic Party of Japan
(Minshuto or DPJ) and other parties are skeptical about the validity
of the Maritime Self-Defense Force's refueling operations in the
Indian Ocean. Legal grounds for the refueling mission are likely to
remain as the main point of contention regarding the new
legislation, as well.

UN forced to express appreciation

The government is allowed to dispatch SDF troops overseas under the

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UN Peacekeeping Operations (PKO) Cooperation Law. But the Operation
Enduring Freedom - Maritime Interdiction Operations (OEF-MIO) in the
Indian Ocean, in which the MSDF is taking part, are not peacekeeping
operations. The OEF is America's war on the Al Qaeda and other
terrorist groups that are responsible for 9/11. The government needs
different legal justification for dispatching the SDF to provide
logistical support.

The government enacted the Antiterrorism Law in 2001 based on UN
Security Council Resolution 1368. The resolution, condemning 9/11 as
a threat to international peace and security, expresses the Security
Council's readiness to take all necessary steps to respond to the
attack. Based on this resolution, the government played up the need
to dispatch SDF troops, saying that the UN members were required to
take appropriate antiterrorism measures.

The government used the UN resolution as a desperate step to give
validity to the OEF, which is not a UN operation. However, as it was
adopted before the start of the OEF, the resolution does not
specifically refer or give a seal of approval to the OEF.

Aiming to extend the refueling operations, the government and ruling
parties lobbied the United States and other countries, and as a
result, the UN Security Council adopted this past September
Resolution 1776 that refers to the OEF.

In his meeting with US Secretary of State Condoleezza Rice in
Washington on Sept. 27, Foreign Minister Masahiko Komura expressed
gratitude for US cooperation for the adoption of Resolution 1776
that expresses appreciation for the OEF maritime interdiction
operations.

Appreciation is mentioned in the preface to the resolution, not in
the body, however. A UN source took this view: "Usually, words of
gratitude in a resolution are not taken to mean UN authorization."

Shortly after abstaining from the vote on Resolution 1776, the
Russian Foreign Ministry released a statement ascribing its
abstention to a lack of explanation on the grounds for the MIO by
the United States and other countries, making it clear that the MIO
is outside the UN framework.

The government yesterday presented an outline of new legislation to
the ruling parties for the continuation of the refueling operations.
The government plans to add Resolution 1776 expressing appreciation
for the OEF to the legal grounds for the MSDF mission that already
include Resolution 1368.

DPJ: Resolution 1776 is not UN authorization

Ozawa in a press conference yesterday argued that Resolution 1776
cannot justify the refueling operations, saying: "The resolution is
not about (authorizing the maritime interdiction operations) as UN
operations. It simply includes words of gratitude (for the
operations)." This comment comes from his view that although the
resolution expresses appreciation for the OEF, the maritime
interdiction operations still fall outside the UN framework.

In a press conference in August, Ozawa also said: "The war in
Afghanistan is America's war that was started by President Bush. It
is different in nature from the operations authorized by a UN
Security Council resolution." His logic is that the MSDF's

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logistical support to the war on terrorism, which was launched by
the United States in self-defense, clearly constitutes an exercise
of the right to collective self-defense, which is prohibited under
the Constitution. In yesterday's news conference, Ozawa reiterates
his opposition, describing the refueling operations as assistance to
the US military operations.

Ozawa also thinks Japan is legally allowed to join the International
Security Assistance Force (ISAF), a NATO-led international security
ground force established based on Resolution 1386.

ISAF, however, is not engaged in UN peacekeeping operations but
involves military actions against the Taliban and other
antigovernment forces. Ozawa told visiting German Chancellor Merkel
in late August that he did not necessary agree with the ISAF's
activities.

The DPJ is determined to focus on uncovering facts about the
refueling operations by exercising investigative powers in national
politics, while endeavoring to come up with counterproposals mainly
for improving the people's livelihood in contrast to the
government's new legislation.

(4) Interview with Foreign Minister Masahiko Komura: Ruling camp
will discuss issue of continuing refueling mission in fair and
square manner (Tokyo Shimbun)

TOKYO SHIMBUN (Page 2) (Full)
October 3, 2007

-- The government has nearly finalized an outline for new
legislation to extend the Maritime Self-Defense's (MSDF) refueling
mission in the Indian Ocean. What approach is the ruling camp going
to take in talks with the Democratic Party of Japan (DPJ)?

There will be no other way but to explain that the continuation of
the mission has been requested by the international community and is
also in Japan's national interests. It is impossible to change the
other side's views by hypnotizing it. We will discuss the issue in a
sincere and fair manner.

-- Do you think it will be unavoidable to take another vote on an
antiterror bill in the House of Representatives if the DPJ refuses
to offer cooperation?

We acknowledge that there could be the possibility constitutionally
as a last resort, but that is not the best solution. We will
continue to make desperate efforts to have the people and the
opposition camp understand and have the bill passed in the Diet in a
peaceful way, though it might be difficult objectively.

-- Regarding the period of the MSDF operation, which do you think is
desirable, one year or two years?

For stable (activities), the period of two years is more desirable
than one year.

-- How do you evaluate the draft agreement reached at the latest
six-party talks on North Korea's denuclearization?

That is the first step in the "second phase." Although I do not
think the agreement is satisfactory, one-step forward would be

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better than nothing.

-- The government intends to extend its economic sanctions against
North Korea. What do you think about a balance between dialogue and
pressure?

Regardless of who is in power, the key point is how North Korea will
change its posture. Since the problem over which Japan decided to
apply sanctions on North Korea has yet to be dissolved, it is
necessary for Japan to extend its sanctions. If North Korea changes
itself in a favorable way, Japan may lift the sanctions.

-- Prime Minister Yasuo Fukuda is scheduled to visit China. Will a
settlement of the issue of gas field development in the East China
Sea be the premise for the visit?

If a complicated, difficult issue is resolved, the people will be
convinced that Japan and China are in strategic mutually-beneficial
relations. If the issue is left unresolved, it might be difficult to
establish such relations in a comprehensive way. Resolving this
issue is extremely important. Even so, it does not mean that unless
this issue is resolved, the prime minister will not go to China.

-- A Japanese journalist was shot to death in Burma. Following this
news, what response does the government plan to make to the military
junta?

We must be upset at such an incident, but anger alone is not enough.
We will consider what is needed in order to spread democratization
in that nation.

(5) Interview with Defense Minister Ishiba: Suspension of MSDF
refueling will cause trouble to other countries (Tokyo Shimbun)

TOKYO SHIMBUN (Page 2) (Full)
October 4, 2007

-- What effect a suspension of the Maritime Self-Defense Force's
(MSDF) refueling operations in the Indian Ocean will have?

Ishiba: It is extremely significant that Japan is provided with
high-performance supply ships while various countries have been
managing with only a few vessels. Should Japan suspend the MSDF
refueling operation, it will greatly affect other countries. We
should be aware of this.

-- New legislation enabling the MSDF to continue its refueling
mission does not require Diet approval. Don't you think that such
would lead to retreat from civilian control?

Ishiba: The present Antiterrorism Special Measures Law specifies
such measures as refueling, transportation, and search-rescue
operations; and the law stipulates that the cabinet will decide
which measures should be provided; and Diet approval is necessary
when activities start. The new legislation specifies what measures
the MSDF will offer. Most measures in the basic plan will be
included in a new antiterrorism law. With the enactment of new
legislation, Diet involvement will be guaranteed.

-- The Democratic Party of Japan has opposed Japan's refueling
mission itself.


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Ishiba: I have never heard the DPJ's clear reason for its opposition
to the refueling operation.

-- How will you find common ground with the DPJ?

Ishiba: If the maritime refueling operation violates the
Constitution as the DPJ asserts, we will need to debate whether the
Constitution should be amended. If something should be done to
continue the refueling mission, it would be possible to make a (new)
law. I hope that the DPJ will think deeply about why Japan decided
to send the MSDF to the Indian Ocean.

-- Can you shed light on the alleged diversion of fuel provided by
the MSDF for use in the Iraq war?

Ishiba: As the defense minister, I ordered an investigation of the
777 refueling operations. My ministry is now analyzing in particular
the fuel provided to a supply ship (in question). I want to fulfill
my accountability for this before the start of Diet deliberations
(on the new legislation).

-- How will you negotiate with Okinawa on the government's Futenma
Air Station relocation plan?

Ishiba: The present government's plan to build two runaways in a
V-shape is the best, but the basic policy will not be pushed forward
without local understanding. (In order to obtain understanding and
cooperation from local residents) I think I should visit Okinawa as
early as possible.

(6) Editorial: Prime minister's Diet reply on refueling mission
disappointing (Asahi)

ASAHI (Page 3) (Full)
October 4, 2007

Debate finally kicked off in the Diet about 20 days after former
Prime Minister Abe's sudden announcement of his resignation. The air
in the representative interpellation session held in the House of
Representatives on the first day was unusually full of tension,
reflecting the current state of the reversal of strengths between
the ruling and opposition camps in the House of Councillors. Both
the ruling and opposition parties are expected to conduct heated
discussion.

In the interpellation session, Prime Minister Fukuda has already
disappointed us with his reply on the issue of extending the
Maritime Self-Defense Force's (MSDF) refueling mission in the Indian
Ocean.

Democratic Party of Japan (DPJ) Secretary General Yukio Hatoyama
demanded that the government should disclose information on the
actual state of the refueling operation. In response, the prime
minister gave this curt reply: "The Defense Ministry is making
efforts to enable disclosing information as much as possible, while
obtaining the understanding from countries concerned."

To be sure, the refueling operation is connected with other
countries' military operations. There might be tips which Japan
cannot disclose based on its judgment alone. Even so, it is hard to
see that the Defense Ministry is eager to disclose information.


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The prime minister promised in his policy speech to discuss key
tasks with the opposition camp in a sincere manner. But sincerity
cannot be detected from his Diet replies.

The allegation has come up that fuel supplied to United States'
warships by the MSDF was used in the Iraq war, deviating from the
purpose of the Antiterrorism Special Measures Law. A Japanese civic
group has obtained data of the US Navy based on the US
information-disclosure system. This data increases the suspicion.

After checking, the government changed the amount of fuel provided
to US supply vessels in the Indian Ocean in February 2003 from the
initially announced 200,000 gallons to 800,000 gallons.

The fuel provided by the MSDF was supplied to USS Kitty Hawk. The
aircraft carrier is now heading toward Iraq to engage in a
monitoring operation. The government used to explain that the
diversion of the oil for use in Iraq was inconceivable because
200,000 gallons is equivalent to one day's consumption by a refueled
carrier. The grounds for this reply have now collapsed.

Asked about the correction, the prime minister replied: "It was a
clerical error." Then how can he explain about the possibility of
diversion? If proved true, this is a far more serious error than the
clerical error.

The government inserted the following view into its written reply:
The governments dispatching the warships refueled by the MSDF
determine what operations the ships should carry out after refueled,
so the Japanese government has no future details. Such would seem to
be a defiant attitude.

The government enacted the Iraq Special Measures Law, which strictly
restricts the duties and areas of activities of SDF troops, but only
after severe debate was conducted in the Diet. The law does not
authorize any refueling operations at sea. If the diversion of fuel
for use in Iraq is proved true, the refueling operation will
constitute a serious offense.

The amount of MSDF-provided fuel increased when the Iraq war broke
out. Moreover, more than 60 PERCENT of the MSDF-refueled US naval
ships were replenishment tankers.

When SDF troops are dispatched overseas, the government naturally
should restrict their activities under law, and the Diet naturally
should be informed of the actual state of their activities. That is
indisputably the way postwar democracy should be.

The prime minister must properly provide answers to the allegation
on the refueling operation. The government is preparing new
legislation that would restrict the MSDF's activities to refueling,
but the first thing it should do is to reveal the true state of the
ongoing MSDF activities.

(7) Tug-of-war between LDP, DPJ ahead of questioning sessions by
party representative (Tokyo Shimbun)

TOKYO SHIMBUN (Page 2) (Full)
October 3, 2007

Prior to the start of questioning session by party representatives
today at the Lower House, a tug-of-war moved into full swing between

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the ruling Liberal Democratic Party (LDP) and the main opposition
Democratic Party of Japan (DPJ or Minshuto). Although the LDP has
asked the DPJ to hold prior consultations, the largest opposition
party has submitted to the Diet its own bills in succession without
regard to the LDP's request.

The LDP's management of Diet affairs has now completely changed from
the hard-line stance it took in the regular session before the July
Upper House election. The party has proposed to the DPJ the setting
up of a consultative organ before bills are presented to the Diet.
The LDP's aim is to find the middle ground through prior
consultations, as well as to proceed with Diet deliberations
smoothly.

Although the LDP has yet to get favorable answers from the DPJ, it
continues to take a low profile. At yesterday's press conference,
LDP Diet Affairs Committee Chief Deputy Chairman Kenji Kosaka
pointed out that the "practice" under which the LDP used to explain
to the opposition camp the contents of a bill it had sponsored still
exists.

The LDP also has proposed establishing a consultative body made of
representatives of the two parties before submitting bills on
appointments, which require approval of the two Diet chambers. This
is because since there is no provision that the Lower House can take
a vote twice on a bill on appointments of committee posts, if the
DPJ votes against the bill, it would hit a roadblock. A senior LDP
Diet Affairs Committee member stressed: "The DPJ, the largest party
in the Upper House, should bear some responsibilities."

The DPJ remains completely indifferent to the LDP's request of
setting up a consultative organ, with one senior Diet Committee
member saying, "We will not be engaged in such collusion." The party
intends to reject the LDP's requests. The chairmen of four
opposition parties reached agreement in a meeting yesterday that
their parties will line up in favor of refusing the LDP's
entreaties.

The DPJ continues to submit its own bills to the Upper House, where
the opposition camp holds a majority. The party submitted yesterday
a bill to give aid to hepatitis patients. The DPJ's strategy is to
adopt first at the Upper House bills that would be easily accepted
by the public, and send them to the Lower House, in order to
undermine the ruling coalition's situation.

The DPJ has submitted five bills so far to the Upper House. The
outlook is that the party will ultimately submit 11 bills.

The main opposition party initially planned to submit several bills
to the current session because its Upper House members had little
experience in Diet debate. However, when Ozawa instructed that
presenting their own bills is important, the party has shifted its
initial plan. The party has decided to submit bills related to
pension issue, child-rearing, and agriculture, which were included
in its manifesto for the July Upper House election.

The party has calculated that if will be able to gain popularity if
it submits bills soon after the Upper House election. The DPJ's move
is in response to a sense of alarm against the LDP's request for
prior consultations.

DPJ Secretary General Yukio Hatoyama commented on the LDP's request

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for prior consultations with his party: "If discussions go well, the
LDP will get the credit; and if unsuccessful, the opposition will
have to bear responsibility." The party thinks that holding prior
consultations will give the public the impression of opaque
deal-making. Therefore, the party intends to debate the LDP in the
Diet, refusing prior consultations.

(8) Editorial: Can DPJ show capability to run government? (Nikkei)

NIKKEI (Page 2 (Full)
October 4, 2007

With the start of an interpellation session following Prime Minister
Yasuo Fukuda's policy speech, debates between the ruling and
opposition camps have moved into full swing in the Diet, where the
opposition is dominant in the Upper House. Yukio Hatoyama, Secretary
General of the Democratic Party of Japan (DPJ or Minshuto), made his
confrontational stance clear in pursuit of an early dissolution of
the Lower House and a snap election. Prime Minister Fukuda, who took
the podium for the first time as prime minister, warded off
Hatoyama's demand for a Diet dissolution in a matter-of-fact tone
and repeatedly called on the DPJ to respond to his call for talks
with the ruling camp in order to protect people's lives and national
interest.

The DPJ is no longer just an opposition party. It won a landslide
victory in the July Upper House election. It has the power to reject
all bills submitted by the government and the ruling camp in the
Upper House. If it becomes a top party in the next election, it
could take the reins of government. It should not forget that its
capability to run the government is being tested in the current Diet
session.

President Ozawa should have taken the podium in the session, the
first stage for full-scale Diet debates since the Upper House
election, and directly appealed why a change of administration is
needed, explaining the DPJ's policy and its Diet approach fairly and
squarely. It was anticlimactic that he avoided asking questions.

Regarding the Fukuda cabinet's policy of cooperating with the
opposition, Hatoyama noted, "The DPJ cannot accept collusive,
behind-doors talks with the ruling camp." He also reiterated the
stance of continuing to oppose a continuation of refueling
operations by the Maritime Self-Defense Force in the Indian Ocean,
the focus of highest attention in the current Diet session. As
reasons for that, Hatoyama cited (1) that the refueling operation is
not based on a UN resolution; and (2) that there is no clear exit
strategy due to the deteriorated situation in Afghanistan.

Ozawa during a press conference on Oct. 2 indicated a hard-line
stance, saying, "Since our position is that the continuation of the
refueling services is not allowed under the Constitution, there is
no room for talks," Whether the DPJ's assertion is persuasive or not
is questionable. We must not lose a viewpoint regarding whether an
option to end the refueling operation would be in the interest of
Japan, though it is necessary to deepen Diet discussion of the
reality of the refueling operations.

The DPJ has submitted many bills, including a bill prohibiting the
diversion of pension premium funds, a bill amending the Natural
Disaster Victims' Relief Law, a bill amending the Law Assisting
Disabled Persons' Independence, to the current Diet session, saying

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that it will realize policies it pledged to the public during the
Upper House election campaign. These bills might be adopted in the
Upper House, but they cannot be passed into law if the LDP does not
support them. If the DPJ seriously wants to secure Diet approval for
those bills, talks with the ruling parties would become unavoidable
sooner or later.

The DPJ has pledged that it would uncompromisingly pursue wasteful
spending of tax money in the Diet and explain funding resources to
realize the pledges it made to the public. It is also necessary to
closely examine whether it is possible to really materialize a basic
pension system, based on a system fully funded with tax money
without hiking the consumption tax.

(9) Editorial: Can North Korea keep its promises as mentioned in the
six-party agreement? (Tokyo Shimbun)

TOKYO SHIMBUN (Page 5) (Full)
October 4, 2007

A roadmap has been set for North Korea's nuclear denuclearization.
Neighboring countries must closely watch if the North will keep its
promises. The delisting of the North as a state sponsor of terrorism
by the United States is a key element.

A six-party agreement featuring the roadmap to advance the second
phase has officially been unveiled. This follows the first phase, in
which North Korea shut down its key nuclear facilities.

Although it clearly specifies Dec. 31 as the deadline for disabling
major nuclear facilities and declaring all nuclear programs, the
agreement contains some loopholes and many ambiguous points as
well.

Under the agreement, the North is required to disable three
facilities at Yongbyon: a 5 megawatt graphite-moderated nuclear
reactor, a nuclear fuel fabrication plant, and a spent-fuel
reprocessing facility. If the period of disablement were set for a
year or so, the North might reactivate those facilities once that
period was over. The facilities must be abandoned once and for all.
There are other facilities that look suspicious as well.

That is why a full declaration of all nuclear programs is so vital.
A complete declaration would clarify the total amount of plutonium
and the number of nuclear bombs possessed by North Korea. A threat
from North Korea comes from them.

The North also reaffirmed its commitment not to transfer nuclear
materials, technology, or know-how. This, too, requires monitoring.
An alleged program to produce highly enriched uranium also requires
appropriate measures, such as an inspection, so as not to leave any
suspicions.

The joint statement issued in September 2005 says: "The DPRK
committed to abandoning all nuclear weapons and existing nuclear
programs."

If the six-party framework were to back away from it, its ultimate
goal of denuclearizing the Korean Peninsula would turn into pie in
the sky.

To prevent that from happening, the United States must not delist

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North Korea as a state sponsor of terrorism. Pyongyang is fixated on
this matter because it is directly connected with sanctions against
North Korea.

The agreement also says: "The United States will begin the process
of removing the designation of the DPRK as a state sponsor of
terrorism in parallel with the DPRK's actions."

This leaves some room for controversy over its interpretation. The
delisting must be based on nuclear abandonment and the elimination
of suspicions about sponsoring terrorism, such as repatriating
Japanese abductees.

The United States and North Korea have been taking the lead lately
in the six-party talks. Repeated compromises by the Bush
administration driven by a desire to produce results by the end of
the year would lead to serious problems in the future. The United
States bears extremely heavy responsibilities.

About Japan-North Korea relations, the agreement reads: "The DPRK
and Japan will make sincere efforts to normalize their relations
expeditiously in accordance with the Pyongyang Declaration, on the
basis of the settlement of the outstanding issues of concern." We
urge North Korea to take steps to quickly settle the abduction
issue, one of the "outstanding issues of concern."

(10) Editorial: Consideration must be given to ordinary shareholders
in triangular mergers (Nikkei)

NIKKEI (Page 2) (Full)
October 4, 2007

Following the removal of a ban on triangular mergers in May, the
first triangular merger in effect will take place shortly. The
Citigroup of the US announced that it will wholly own the Nikko
Cordial Group, which is now under its umbrella, through a stock swap
using its own stocks. The ban on the triangular merger method was
removed with the aim of boosting foreign investment in Japan. The
case this time deserves high marks in terms of certain consideration
having being given to protecting ordinary stockholders.

The triangular merger means a merger method in which foreign
companies acquire Japanese companies through their subsidiaries in
Japan. A major feature of the method is that an acquiring company
transfers its foreign stocks, instead of cash, to the shareholders
of a company to be.

There are two points worthy of attention in the merger between
Citigroup and Nikko Cordial. First, Citigroup has applied for its
listing on the Tokyo Stock Exchange (TSE) and its application will
likely be granted before year's end. As a result, Nikko Cordial will
be delisted, but its stockholders will be able to trade Citigroup's
stocks obtained through a stock swap on the TSE.

Second, Citigroup will transfer, in principle, its stocks equivalent
of 1,700 yen to each Nikko share. Citigroup started a takeover bid
(TOB) paying 1,700 yen per stock this spring. It has apparently
adopted the same condition its set at that time so that Nikko
shareholders would not feel a sense of unfairness.

It is meaningful that the largest foreign securities house in
nominal and real terms operating in Japan will come into existence.

TOKYO 00004666 012 OF 012


If the merger this time spurs a move for domestic companies to
strengthen their global strategies, it would boost opportunities for
investors to internationally disperse the destinations of their
investments and for companies to procure funds abroad or implement
M&As.

We want to give consideration here to pending issues posed by
triangular mergers. In order to make foreign companies find it easy
to list themselves on the Japanese stock market, it is necessary to
lower various costs involved, including screening of foreign
companies. The TSE at the end of last year introduced a simplified
screening system to be applied to companies that are listed on the
New York Stock Exchange and other major stock exchanges. However,
this system has not yet been applied. We want the TSE to come up
with ideas for reducing foreign companies' burdens.

From the viewpoint of protecting investors, it is necessary for
Japanese companies to explain procedures arising from triangular
mergers in lucid language. Stockholders who are against a merger
proposal have a right to have their stocks purchased by an acquiring
company. It is essential to spread information like this to
investors.

DONOVAN

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