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Cablegate: Japanese Morning Press Highlights 10/10/07

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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;
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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 10/10/07

Index:

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

War on terror in Afghanistan:
4) 49 PERCENT approve of continuing MSDF refueling operations in
Indian Ocean, according to Yomiuri poll; Fukuda Cabinet support rate
at 59 PERCENT (Yomiuri)
5) New anti-terror bill to allow continued MSDF services in Indian
Ocean to be submitted to the Diet next week (Nikkei)
6) US assures that there was no diversion of MSDF oil supplied for
OEF/MIO in the Indian Ocean (Asahi)
7) Defense Ministry: 90 PERCENT of MSDF refueling in Indian Ocean
went to US ships (Yomiuri)
8) MOD: Since fiscal '04, no MSDF oil went to US supply ships in the
Indian Ocean (Mainichi)
9) Use of oil supplied to OEF-related warships in Indian Ocean was
never clarified in the exchange of notes between US, Japan (Asahi)
10) MOD: Those in charge who mistakenly recorded wrong MSDF
refueling amount will be punished (Yomiuri)

Defense issues:
11) Prime Minister Fukuda: "Right of collective self-defense is not
allowed" - taking opposite stance than his predecessor Abe (Tokyo
Shimbun)
12) Defense Minister Ishiba, Okinawa governor meet, but the gap over
Futenma remains as wide as ever (Mainichi)
13) Fukuda denies any secret agreement with US on nuclear weapons
(Mainichi)
14) US, Japan, Australia to engage in P3C joint drill (Nikkei)

North Korea problem:
15) Fukuda unhappy with reported statement by DPRK leader Kim Jong
Il that there are no more abductees in North Korea (Tokyo Shimbun)

16) US tells North Korea that if it expects removal from list of
states sponsoring terrorism progress on abduction issue is
indispensable (Mainichi)
17) Concern mounting in government, LDP that Japan's renewed
extension of sanctions of North Korea could hinder progress in
bilateral talks (Mainichi)
18) Fukuda does not rule out trip to Pyongyang if need arises
(Mainichi)

Political spotlight:
19) Former LDP presidential contender Aso writes article stressing
his policy differences from Fukuda and stating readiness to run
again in election (Nikkei)
20) LDP turns tables and attacks DPJ head Ozawa in the Budget
Committee (Asahi)
21) DPJ trying to control damage from reports of Ozawa's possibly
illegal real-estate deals under political funds control law (Tokyo
Shimbun)

Articles:

1) TOP HEADLINES

Asahi:
MLIT to install 200-300 interchanges for ETC-equipped cars

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Mainichi:
Labor Standards Supervision Office orders 1,679 firms to pay
overtime

Yomiuri:
Police to build criminal case against former Paloma Industries
president and senior officials over defective water heater deaths

Nikkei:
13 industries plan deep additional cuts in CO2

Sankei:
Mitsubishi Heavy Industries to begin accepting orders for Japan-made
jet airliners

Tokyo Shimbun:
Prime Minister Fukuda at Lower House Budget Committee: The
Constitution does not allow Japan to use the right of collective
self-defense

Akahata:
Women's movement spreading in Asahikawa, Hokkaido

2) EDITORIALS

Asahi:
(1) Prime Minister Fukuda should quickly come up with North Korea
strategy
(2) Life insurance firms must pay benefits

Mainichi:
(1) Continued sanctions on North Korea: Abduction issue must be
resolved through bilateral negotiations
(2) Politics and money: Ozawa should explain again

Yomiuri:
(1) DPJ is leading player behind the scenes at Lower House Budget
Committee sessions
(2) North Korea's nuclear program still threatens Japan

Nikkei:
(1) Life insurers must attach importance to policyholders and be
true to words
(2) France shifts to pro-US foreign policy

Sankei:
(1) Government should negotiate with Pyongyang on the premise that
abductees are all alive
(2) Research seismically active area in the Sea of Kumano

Tokyo Shimbun:
(1) Diet debate on pension issues: Government must show all data on
pension records
(2) Extension of sanctions on North Korea: Nuclear and abduction
issues cannot be separated

Akahata:
(1) Diet debate on MSDF refueling mission: It has now clear that
Japan's oil supporting war

3) Prime Minister's Official Residence (Kantei)

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Prime Minister's schedule, October 9

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

08:05
Met with Deputy Chief Cabinet Secretary Ohno at the Kantei.

08:31
Cabinet meeting in the Diet building. Then met with Chief Cabinet
Secretary Machimura.

SIPDIS

13:00
Lower House Budget Committee meeting.

17:04
Met with Secretary General Ibuki, followed by Lower House member
Seiken Sugiura.

17:29
Met with Sadako Ogata, director of the Japan International
Cooperation Agency. Then attended a Regional Revitalization
Headquarters meeting.

18:34
Met with Asian and Oceanian Affairs Bureau Director General Sasae.

19:41
Returned to his residence in Nozawa.

4) Poll: 49 PERCENT want MSDF refueling continued; Cabinet support
rate at 59 PERCENT

YOMIURI (Page 1) (Abridged)
October 10, 2007

The approval rating for Prime Minister Fukuda's cabinet was 59.1
PERCENT , the Yomiuri Shimbun found from its face-to-face nationwide
public opinion survey conducted Oct. 6-7. The disapproval rating for
the Fukuda cabinet was 26.7 PERCENT . In monthly face-to-face
surveys taken shortly after the inauguration of new cabinets since
the Ohira cabinet that came into office in 1978, the Fukuda cabinet
ranked fourth in popularity, following the Koizumi cabinet (85.5
PERCENT ), Hosokawa cabinet (71.9 PERCENT ), and Abe cabinet (70.0
PERCENT ). By gender, women (63 PERCENT ) topped men (54 PERCENT ).
The most common reason given for supporting the Fukuda cabinet was
its stability with 44 PERCENT .

In the survey, respondents were also asked how long they would like
the Fukuda cabinet to continue. In response to this question, 32
PERCENT answered that they would like it to continue "as long as
possible," topping all other answers.

In connection with the Maritime Self-Defense Force's refueling
mission in the Indian Ocean, respondents were also asked if they
wanted the MSDF's refueling mission to be continued. To this
question, 47 PERCENT answered "yes," with 37 PERCENT saying "no."
As seen from these figures, affirmative answers outnumbered negative
ones. Among those who support the ruling Liberal Democratic Party,
"yes" accounted for 69 PERCENT , with "no" at 22 PERCENT . Among
those who support the leading opposition Democratic Party of Japan

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(Minshuto), "yes" was at 32 PERCENT , with "no" at 59 PERCENT .
Those with no particular party affiliation were split in opinion,
with "yes" at 39 PERCENT and "no" at 42 PERCENT .

5) Government expects to submit new antiterrorism bill to Diet next
week

NIKKEI (Page 3) (Full)
October 10, 2007

The government and the ruling coalition are aiming to start
deliberations in a plenary session of the House of Representatives
to be held next week or later on new legislation to extend the
Maritime Self-Defense Force's (MSDF) refueling mission in the Indian
Ocean. They called on the opposition camp, including the Democratic
Party of Japan (DPJ), to hold consultations on the legislation, but
the DPJ declined this proposal. Given that the current Antiterrorism
Special Measures Law is to expire on Nov. 1, they are keeping in
mind the possibility of submitting the legislation to the Diet next
year without obtaining the consent of the opposition camp.

Liberal Democratic Party Diet Affairs Committee Chairman Tadamori
Oshima told reporters yesterday: "We conducted debate (on the
dispatch of SDF troops) for seven years. Even if we discuss the
issue further, it is inconceivable that the debate will deepen,"
indicating the government would hasten the submission of the bill.
The government and the ruling bloc plan to complete in a House of
Councillors' Budget Committee meeting planed for Oct. 15-17 the
intraparty procedures necessary to present the bill to an
extraordinary Executive Council meeting.

The government and the ruling parties aim to have the new bill
passed the Lower House in early November. If they adopt the 60-day
regulation stipulating that if a bill is not passed by the House of
Councillors with 60 days after it was adopted by the Lower House,
the bill shall be regarded as voted down, the compilation of a
budget bill for next fiscal year will likely be delayed to early
next year.

Under a constitutional rule, if a bill that was rejected in the
Upper House is readopted with more than two-thirds of all the votes
in the Lower House, the bill will be enacted into law. But since the
New Komeito is strongly opposed to this approach, coordination in
the ruling camp is unlikely to go smoothly.

6) US denies using MSDF fuel for Iraq war; Japan demands further
evidence

ASAHI (Page 1) (Full)
October 10, 2007

In February 2003, shortly before the Iraq war, a Maritime
Self-Defense Force supply ship operating in the Indian Ocean under
the Antiterrorism Special Measures Law indirectly refueled the USS
Kitty Hawk, a US aircraft carrier. On this indirect refueling, the
US government has told the Japanese government that the MSDF fuel
was not used for Iraq operations, sources have revealed. The MSDF
refueled the Kitty Hawk with 800,000 gallons. In this regard, the US
government says the MSDF fuel provided to the flattop at that time
was used for antiterror operations only. However, there are no
grounds for that. The Japanese government has therefore asked the US
government to come up with more materials, taking the position that

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the US government's account is insufficient.

The US government's answer was given to the Japanese government on
Oct. 5. "They say the USS Kitty Hawk was refueled with 800,000
gallons," a government official said. "They also say the fuel was
used for Operation Enduring Freedom (OEF) in Afghanistan," the
official added. Meanwhile, the US government does not specify how
the Kitty Hawk operated after receiving the MSDF fuel amounting to
800,000 gallons (or 3,030 kiloliters), according to the official.

The Japanese government therefore asked the US government to come up
with additional documents. A senior Defense Ministry official said:
"They say the Kitty Hawk used the entire fuel supply of 800,000
gallons for antiterror operations, but this explanation alone is not
good enough. We have to ask them to show military operations the
Kitty Hawk was engaged in after she was refueled."

Defense Minister Ishiba also stated before the House of
Representatives Budget Committee in its meeting yesterday: "We asked
the United States, and we confirmed that they did not do so (use the
MSDF fuel for Iraq operations). We will have to look closely into
what can endorse that." The Defense Ministry has also asked the US
government to provide data about the activities of US supply ships
in addition to the Kitty Hawk.

The MSDF's indirect refueling of the Kitty Hawk was brought to light
in May 2003 by Carrier Battle Group 5 Rear Adm. Moffit in his
testimony. The Defense Agency at that time said the MSDF refueled
the Kitty Hawk with 200,000 gallons (760 kiloliters). In September
this year, however, Peace Depot, a Yokohama-based civic group,
learned from the Kitty Hawk's log and other sources obtained under
the US information disclosure system that the Kitty Hawk was
refueled with 800,000 gallons. The government later revised the MSDF
fuel supply to 800,000 gallons. After that, the Japanese government
asked the US government to confirm whether the MSDF fuel provided to
the Kitty Hawk was used for any other purposes.

Meanwhile, the Defense Ministry yesterday made public the MSDF's
fuel supplies to foreign naval supply vessels in the Indian Ocean.
In 2001 and the following fiscal years, the MSDF's indirect
refueling of foreign supply vessels totaled 267,000 kiloliters in
105 fuel supplies. The MSDF made 87 fuel supplies for US vessels,
adding up to 237,000 kiloliters. The MSDF's fuel supplies for US
vessels accounted for about 89 PERCENT of its entire refueling of
foreign vessels.

The MSDF refueled naval vessels from five countries-the United
States, Britain, France, the Netherlands, and Italy. In FY2002, when
US and British forces launched into attack operations in Iraq and
the MSDF's fuel supplies sharply increased to 168,500 kiloliters,
the MSDF's fuel supplies for US naval vessels amounted to 138,000
kiloliters, accounting for a little over 80 PERCENT .

7) 90 PERCENT of MSDF fuel went to US supply ships

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

The Defense Ministry made public for the first time yesterday the
amounts of fuel provided to supply vessels of other countries by the
Maritime Self-Defense Force in the Indian Ocean under the
Antiterrorism Special Measures Law. The MSDF provided a total of

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267,000 kiloliters of fuel on 105 occasions to foreign supply
vessels from December 2001 through August 2007. Of that amount, the
MSDF provided US vessels with 237,000 kiloliters of fuel, or 89
PERCENT of the total, on 87 occasions.

In terms of fuel to the US by year, 96,000 kiloliters (41 times) was
provided in FY2001, 138,000 kiloliters (45 times) in FY2002, and
just 2,000 kiloliters (one time) in FY2003, the year the Iraq war
began.

As for countries other than the United States, France received
13,000 kiloliters (7 times), Italy 7,000 kiloliters (4 times), the
Netherlands 6,000 kiloliters (3 times), and Britain 5,000 kiloliters
(4 times). They were all serviced in FY2003 or later.

The MSDF has provided 484,000 kiloliters of fuel to foreign aircraft
carriers and other vessels on 777 occasions. Of it, supply ships
accounted for 55 PERCENT .

8) No fuel supply to US oilers since FY2004: Defense Ministry

MAINICHI (Page 2) (Full)
October 10, 2007

The Defense Ministry yesterday made public the quantities of fuel
provided by Japan to foreign supply ships under the Antiterrorism
Special Measures Law. This public announcement came after suspicions
that US naval supply ships refueled by the Maritime Self-Defense
Force in the Indian Ocean might have used MSDF-supplied fuel for the
Iraq war. MSDF fuel supplied to US naval vessels accounted for 89
PERCENT of all MSDF refueling. However, MSDF fuel supplied to US
supply ships decreased sharply in fiscal 2003, when the government
was grilled in the Diet with questions asking whether MSDF fuel was
being used for the Iraq war. In 2004 and the following fiscal years,
there was no fuel supplied to such US vessels.

According to the Defense Ministry, the MSDF refueled supply ships
from five countries-the United States, France, Italy, the
Netherlands, and Britain-with a total of 267,000 kiloliters
servicing 105 times altogether during the period from December 2001,
when the MSDF's refueling mission started, through the end of August
this year. The MSDF's fuel supplies to US supply vessels added up to
237,000 kiloliters. However, those fuel supplies were mostly made in
FY2001-2002. In FY2001, the MSDF refueled US supply ships with a
total of 96,000 kiloliters servicing them a total of 41 times. In
FY2002, the MSDF refueled them with 138,000 kiloliters servicing
them 45 times in total. In FY2003, the MSDF made only one fuel
supply to a US supply ship, amounting to 2,000 kiloliters.

The MSDF, in its refueling of other foreign naval vessels, made
seven fuel supplies to France with 13,000 kiloliters, four supplies
to Italy with 7,000 kiloliters, three supplies to the Netherlands
with 6,000 kiloliters, and four supplies to Britain with 5,000
kiloliters. In 2004 and the following fiscal years, the MSDF
refueled these four countries' naval vessels.

Meanwhile, the amount of MSDF fuel supplied to US supply vessels in
FY2003 was four times larger than the figure in the government's
parliamentary statement. In this regard, Defense Minister Shigeru
Ishiba, sitting in on the House of Representatives Budget Committee
yesterday, indicated that he would consider punishing officials in
charge who made the mistake.

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9) Use of Japanese fuel not specified in exchanged notes

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

The government has often referred to the existence of official notes
exchanged with other countries in denying the allegation that fuel
provided by the Maritime Self-Defense Force in the Indian Ocean has
been diverted for use in the Iraq war. Although the exchanged notes
say that (fuel) is provided under the Antiterrorism Special Measures
Law, they do not specify that fuel provided by the MSDF will not be
used for purposes other than the antiterrorism operation -- grounds
insufficient to deny diversion. This makes it difficult for the
government to offer a convincing explanation.

In a House of Councillors plenary session on Oct. 5, Prime Minister
Fukuda made the following statement, citing the existence of
exchanged notes: "The notes exchanged with oil-receiving countries
say fuel is provided under the Antiterrorism Law. Fuel has been
provided after confirming each time that the vessel was engaged in
the antiterrorism operation after explaining the law's spirit. I
understand that provided fuel has been used appropriately in line
with the spirit of the Antiterrorism Law."

The notes exchanged between Japan and the United States in November
2001 say (fuel) is provided to the United States in accordance with
the (Antiterrorism Special Measures) Law on the conditions that: (1)
(fuel and other supplies) are used in ways consistent with the UN
Charter as well, (2) fuel is not moved to parties other than the US
military without the concurrence of the Japanese government, and (3)
personnel concerned with the US military entitled to receive (fuel
and other supplies) are informed of the conditions (1) and (2) from
Japanese government officials. The notes are devoid of any
references limiting the use of fuel to the antiterrorism operation.

In fact, Deputy Director for Operations Brig. Gen. Holmes of the US
Central Command responsible for the Middle East and Afghanistan
indicated that he was not aware of Japan's explanation to limit the
use of fuel to the antiterrorism operation. He did not clarify
whether the US military had used the fuel from Japan strictly in the
way explained by Japan.

With the ambiguity of the exchanged notes in mind, Defense Minister
Shigeru Ishiba told the House of Representatives Budget Committee
yesterday: "Japan has exchanged notes with other countries saying
that (fuel from Japan) is not used for purposes other than those of
the Antiterrorism Law. That might not be enough, so matters are also
worked out (with each country) in Bahrain before fueling." Based on
data from the United States, Ishiba also pointed to the need for
Japan to examine if there was no diversion, tacitly suggesting that
the existence of exchanged notes alone was insufficient.

The exchanged notes will automatically lose their validity when the
Antiterrorism Law expires on Nov. 1. If the government establishes
new legislation, new notes may have to be exchanged. The alleged
diversion is likely to spark a debate on ways to create a
diversion-free system in the envisioned new law.

10) Defense Ministry to punish official who entered wrong data about
fuel provided by Japan


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YOMIURI (Page 4) (Full)
October 10, 2007

In order to deal with the corrected data about the amount of fuel
provided by a Maritime Self-Defense Force's (MSDF) supply ship to a
US carrier under the Antiterrorism Special Measures Law, the
Ministry of Defense (MOD) yesterday decided to punish a Maritime
Staff Office official in charge of entering data into the computer
system and his supervisors. Details of the punishment are under
study. Reportedly, the official in charge and others received the
information from a local unit that the MSDF ship Tokiwa provided
about 800,000 gallons of fuel to the US supply ship Pecos on Feb.
25, 2003, but they entered the amount of fuel provided by Japan to
the US as about 200,000 gallons, which was the amount of fuel
provided to another ship that day.

11) "Exercise of right to collective self-defense is not allowed,"
says prime minister during Lower House Budget Committee meeting:
Puts forward clear difference with previous administration

TOKYO SHIMBUN (Top Play) (Excerpts)
October 10, 2007

A basic question-and-answer session continued at the Lower House
Budget Committee yesterday afternoon, attended by Prime Minister
Yasuo Fukuda and all cabinet ministers. Referring to the
government's interpretation of the Constitution that the exercise of
a right to collective self-defense is forbidden, the prime minister
expressed a negative view toward approving such use, saying, "Full
caution is required in dealing with the issue of to what extent the
exercise of the right to collective self-defense can be allowed as
international activities from the perspective of the interpretation
of the Constitution. The government interpretation has been that the
Constitution does not allow the exercise of a right to collective
self-defense, and there is no change in that."

Former Prime Minister Shinzo Abe was positive toward approving the
exercise of a right to collective self-defense and proceeded with
discussion to pave the way for reviewing the government's
interpretation of the Constitution. Fukuda seems to have put forward
a clear difference from Abe's stance.

12) No agreement reached in talks between defense minister and
Okinawa governor on Futenma relocation

MAINICHI (Page 2) (Full)
October 10, 2007

Ryuko Tadokoro

Okinawa Gov. Hirokazu Nakaima yesterday met with Defense Minister
Shigeru Ishiba in the Diet. This was the first meeting between the
two after Ishiba took office as defense minister. They asserted
their respective views about the relocation of the US military's
Futenma Air Station (from Ginowan City) to the coastal area of Camp
Schwab (in Nago City) and failed to reach agreement.

Nakaima called for adding changes to the central government-proposed
relocation plan, noting, "The base issue needs to obtain the
Okinawan people's understanding and cooperation. I hope the central
government will give consideration to the desires of the local
residents in order to resolve the relocation issue as swiftly as

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possible." In response, Ishiba indicated a cautious stance, telling
Nakaima: "I can't change the government's plan unless there is a
rational reason."

13) Prime Minister Fukuda denies existence of "Japan-US secret deal
on nuclear weapons"

YOMIURI (Page 4) (Full)
October 10, 2007

Prime Minister Fukuda late yesterday was asked by reporters at the
Prime Minister's Official Residence about a memorandum proving a
"secret deal" allowing the United States to bring nuclear arms into
Japanese territory and allegedly concluded in exchange for the
return of the US-occupied Okinawa islands. The memorandum was
discovered at the US National Archives and Records Administration.
Fukuda denied the existence of such a deal, telling reporters: "Such
a thing has been brought up many times in the past. But Japan has
not recognized it." Chief Cabinet Secretary Machimura also told
reporters yesterday evening: "The US has its own rules about
information disclosure and its own way of disclosing information.
But we on the part of Japan have no intention to inquire of the US
about that." Machimura thus stressed Japan had no intention to make
inquiries about the issue to the US.

14) Japan, US, Australia to conduct patrol plane drill

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

The Defense Ministry announced yesterday that Japan, the United
States, and Australia would hold a joint exercise using P-3C patrol
planes on Oct. 17. On the occasion of Australian Air Force's visit
to Japan, Japan's Maritime Self-Defense Force (MSDF) and US Navy
will take part in the drill off the west of Kyushu. P-3C patrol
planes from the three countries will conduct a simulated drill aimed
at improving communications and search-and-rescue activities, as
well as simulating an attack on a Japanese escort ship.

15) Prime Minister Fukuda indicates displeasure with Kim Jong Il's
statement that there are no more abductees; "If it's true, he should
say that to Japan"

TOKYO SHIMBUN (Page 2) (Full)
October 10, 2007

A South Korean government official who joined President Roh Moo Hyun
on his recent visit to North Korea to attend the inter-Korean summit
revealed that General Secretary Kim Jong Il of North Korea said,
"There are no more Japanese abductees." The Japanese government
indicated displeasure to this. However, since Kim has shown a
positive stance toward improving Japan-North Korea relations, the
government intends to confirm the fact in such settings as the
bilateral working group and urge the nation to take concrete action
to settle the issue.

Concerning Kim's remark, Prime Minister Fukuda yesterday evening
told reporters: "The remark was made to a third party. If that is
true, he should say that to Japan." Foreign Minister Komura also
underscored: "That remark is unacceptable. We will not be satisfied
unless General Secretary Kim fulfills his accountability."


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Kim's remark is the same as his nation's usual stance that the
abduction issue has been settled. Despite Japan's demand, there has
been made no concrete progress, as Chief Cabinet Secretary Nobutaka
Machimura said. The government yesterday, which marked the first
anniversary of the nuclear test by North Korea, decided to extend
its economic sanctions.

However, it would be fairly difficult to see progress in the
abduction issue, if Japan alone sticks to the policy of applying
pressure, while other countries, including the US, are inclining to
holding talks with that nation.

As such, Machimura hinted at a flexible stance, saying, "We would
like to consider our future response, based on North Korea's action
regarding various pending issues, including the abduction issue."

The Japanese government wants to obtain a sincere response from
North Korea, by indicating a stance of responding to North Korea's
call for settlement the past account through dialogue, while
applying pressure by continuing economic sanctions.

16) Giving consideration to Japan, US told North Korea that progress
on the abduction issue is indispensable to delisting it as state
sponsor of terrorism

MAINICHI (Page 1) (Excerpts)
October 10, 2007

The Mainichi Shimbun has learned that the US government in
unequivocal terms has informed North Korea -- which is calling for
its name to be removed from the US list of state sponsors of
terrorism -- that in order to be removed from the list, there must
be progress on the issue of abductions of Japanese by North Korean
agents. A US source, who is in a position of knowing the present
state of US-DPRK talks, revealed this to a Mainichi Shimbun
reporter. This source also revealed that anticipating progress in
the abduction issue, the US plans to remove the DPRK before year's
end, following the implementation of the second-phase measure for
denuclearization, as agreed at the six-party talks.

The Bush administration has apparently given consideration to Japan,
where the recent improvement of US-DPRK relations has generated the
argument that Japan is being left behind. It has done so by keeping
the abduction issue and removal of the DPRK from the list of state
sponsors of terrorism as a set.

This source revealed, "The US has conveyed to the DPRK that it would
be very, very difficult to remove it from the list unless there is
progress on resolving the issue the abductions of Japanese."
Assistant Secretary of State Hill, top US envoy to the six-party
talks, pointed out that he expects progress on the abduction issue
this year, based on the outcome of US-DPRK talks. However, this
source said, "It will be President Bush who makes a final decision
on what can be regarded as progress."

17) Concern growing in government, LDP about negative impact of
extension of sanctions on Japan-North Korea talks

MAINICHI (Page 2) (Excerpts)
October 10, 2007

The government decided in a cabinet meeting yesterday to extend its

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sanctions against North Korea for another six months. In response,
concern is growing in the government and the Liberal Democratic
Party about a negative impact of the decision on Japan-North Korea
talks. They keep in mind the remark by North Korean leader Kim Jong
Il in the earlier inter-Korean summit, "I want to carefully watch
moves by the Fukuda administration." The government is expected to
grope for a policy of dialogue with the aim of seeking the best
timing for removing the sanction while maintaining its current
policy of pressure for the time being.

In a joint meeting of Liberal Democratic Party foreign affairs
departments on Oct. 4, some lawmakers expressed concern that
economic sanctions alone may have Japan-North Korea talks come to a
dead end. The atmosphere in the meeting showed a change in views
among lawmakers about policy toward North Korea as the Abe
administration, which took the policy of pressure, was replaced by
the Fukuda administration.

In a session of the normalization working group between Japan and
North Korea held in Mongolia, both sides agreed to continue
dialogue, though there was no progress on the abduction issue. In a
plenary session of the six-party talks in late September, too, Japan
and North Korea confirmed they would make efforts to improve
bilateral relations.

18) Prime Minister Fukuda does not rule out possibility of visiting
North Korea

MAINICHI (Page 2) (Full)
October 10, 2007

When asked yesterday about the possibility of visiting North Korea
and holding talks with General Secretary Kim Jong Il in order to
break the impasse in the abduction issue, Prime Minister Yasuo
Fukuda indicated that he might visit that country, depending on
progress in Japan-North Korea talks, saying: "For the present, I
have no intention to visit that country. But that would depend on
progress in the talks." He continued, "But such talks have yet to
start. I can say it is too early to ask such a thing." Fukuda was
replying to reporters at the Prime Minister's Official Residence.

19) LDP's Aso: I will keep fighting

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

Taro Aso, former secretary general of the ruling Liberal Democratic
Party (LDP), expressed his enthusiasm for running again in the next
LDP presidential election, citing "conservative revitalization" as
key words. He revealed his eagerness to run again for the LDP
presidency in the monthly magazine Bungeishunju, put on sale today.
He commented in the magazine on Prime Minister Yasuo Fukuda: "His
thoughts and beliefs are different from the conservative
revitalization trend in the LDP." Referring also to former Prime
Minister Junichiro Koizumi, he said: "I was disappointed when he
gave words of encouragements to the Fukuda government, which is a
symbol of the old LDP."

20) LDP assails DPJ with barrage of questions at Lower House Budget
Committee session

ASAHI (Page 1) (Excerpts)

TOKYO 00004732 012 OF 013


October 10, 2007

The House of Representatives Budget Committee held a meeting
yesterday for the first time under the government of Prime Minister
Yasuo Fukuda. The meeting started with the ruling Liberal Democratic
Party (LDP) strongly reacting to the assertion by Ichiro Ozawa,
president of the main opposition Democratic Party of Japan (DPJ),
that the Maritime Self-Defense Force (MSDF) refueling mission is
unconstitutional. The ruling camp hammered the DPJ with questions.
Prime Minister Fukuda made his view clear that the MSDF refueling
operations do not violate the Constitution. Under the new "2007
political structure," in which the DPJ is the largest party in the
House of Councillors, DPJ's policies are now being targeted for
debate in the Diet.

Ozawa asserted in a monthly magazine published yesterday that the
MSDF refueling mission is "unconstitutional." He also wrote that if
his party held the reins of government, he would bring about Japan's
participation in the International Security Assistance Force (ISAF)
in Afghanistan which is backed by a clear UN resolution.

LDP Policy Research Council Chairman Sadakazu Tanigaki, a questioner
from the LDP, criticized Ozawa's view, saying: "The Self-Defense
Forces (SDF) is not allowed to exercise armed force (overseas). I
can't understand his view, which is utterly peculiar." A DPJ
lawmaker, one of the Budget Committee directors, claimed that it was
unfair to criticize Ozawa, since he was not present. There was a
scene in which Budget Committee Chairman Ichiro Aisawa, an LDP
member, warned LDP questioners.

Tanigaki also threw doubts on the DPJ's policy measure to cut 15.3
trillion yen in expenditures, which the leading opposition party
included in its campaign pledges for the July Upper House election.
He said: "It is not that easy. I want to discuss it with Mr. Ozawa."
Finance Minister Fukushiro Nukaga stated: "The DPJ's policy does not
mention how much and which areas would be cut." There followed a
barrage of questions about Ozawa's policies and the LDP's.

21) DPJ trying to reduce blow from reignited real estate problem
involving Ozawa

TOKYO SHIMBUN (Page 2) (Full)
October 10, 2007

The Rikuzan-kai group, a fund-raising group for Democratic Party of
Japan (DPJ) President Ichiro Ozawa, earned income by renting out
condominiums it had purchased with political funds, it has been
learned. On this problem, party executive members tried to contain
the political damage from the issue yesterday. In January, it was
also pointed out that the group had reported a huge amount of
property acquisition costs as office expenses. The real estate
scandal involving Ozawa is surfacing again.

An official of the Rikuzan-kai group said in response to an
interview with Tokyo Shimbun yesterday: "Although we could rent them
out free of charge, since we were told it was necessary to invest in
view of funds management, we decided to receive rental fees. It was
not intended to make a profit and does not come under the management
of political funds, which is prohibited under the Political Funds
Control Law."

DPJ Secretary General Yukio Hatoyama told reporters immediately

TOKYO 00004732 013 OF 013


after he returned from Russia: "I heard that the group decided to
rent them out after consulting with the Internal Affairs and
Communications Ministry. There should be no legal problem."

Hatoyama further made a remark that sounded as if the report of
Ozawa's real estate problem were a trap set by the Fukuda
administration, claiming: "The new administration has launched an
attack against the DPJ, motivated by the desire to prevent amendment
of the Political Funds Control Law."

The real estate problem involving Ozawa has come to light just after
former House of Representatives Vice Speaker Kozo Watanabe resigned
from the post of supreme advisor, taking responsibility for a
political funds scandal. Given this, the problem will unavoidably be
a serious blow for the DPJ.

Recognizing anew that the real estate scandal is a time bomb for the
DPJ, party members are worried, with one member remarking: "Even if
this case is not a violation of the law, questions will be
inevitably posed on why the office owns such expensive properties."


Former Chief Cabinet Secretary Hiroyuki Hosoda of the Liberal
Democratic Party lashed out at Ozawa in a meeting yesterday of the
Lower House Budget Committee over this problem, stressing: "All
politicians should purify themselves." As it stands, the
DPJ-envisioned strategy of shaking the ruling camp over the
politics-and-money problem has already begun to fall through.

DONOVAN

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