Cablegate: Japanese Morning Press Highlights 10/19/07

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UNCLAS SECTION 01 OF 08 TOKYO 004879

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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 10/19/07

Index:

MSDF refueling mission:
1) Pentagon denies diversion of MSDF fuel, but finds it difficult to
track use of all fuel; Ambassador Schieffer also denies diversion
(Yomiuri)
2) Government sees US statement on MSDF fuel as "sincere" but
opposition camp is more suspicious of fuel diversion than ever
(Nikkei)
3) Defense Minister Ishiba willing to release some of the ship logs
on refueling operations in the Indian Ocean if the opposition
requests such (Yomiuri)
4) Government, ruling parties resolve to pass the new anti-terror
bill during the current Diet session (Yomiuri)
5) British Prime Minister Brown in telephone call to Prime Minister
Fukuda expresses hope that MSDF refueling service will continue
(Yomiuri)

DPJ on the move:
6) Democratic Party of Japan (DPJ) submits bill to scrap the Iraq
Special Measures Law in order to bog down Lower House deliberations
(Mainichi)
7) DPJ having trouble cobbling together its own bill to counter the
ruling camp's anti-terror bill (Yomiuri)
8) -- DPJ suddenly decides to accept prior talks with the ruling
camp over the political funds bill (Yomiuri)

Defense affairs:
9) Key defense contractor with cozy relations with former vice
defense minister Moriya being investigated by prosecutor's office
(Sankei)
10) Moriya regularly treated to free golf at posh club by defense
contractor (Asahi)
11) Concerned about impact of MSDF refueling row, government mulling
reducing the cuts in the host-nation support budget for US forces in
Japan (Mainichi)
12) Futenma council of local and central government officials to
meet next month (Yomiuri)

13) Diet members' league on the abduction issue to send a delegation
to the US later this year (Sankei)

Articles:

1) US gov't denies fuel diversion

YOMIURI (Page 2) (Full)
October 19, 2007

WASHINGTON-The US Department of Defense released a statement
yesterday, saying US warships refueled by the Maritime Self-Defense
Force in the Indian were entirely in support of Operation Enduring
Freedom (OEF) in Afghanistan. With this, the Pentagon denied fuel
diversion. In its statement, however, the Pentagon added that it
would be "difficult" to track the use of all fuel supplied.

As one of the reasons why it is difficult to track the use of all
fuel provided, the Pentagon says fuel provided by Japan is not
segregated and is tanked with fuel from other sources. The Pentagon
also explains that US warships may be engaged in multiple missions.

US envoy also denies fuel diversion

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Meanwhile, the government has now presented a new antiterror
legislative measure to the Diet. In this regard, US Ambassador to
Japan Schieffer expressed hopes for the legislation's early passage
through the Diet. "We are also aware of the difficulty in continuing
(the MSDF's) activities," Schieffer said yesterday evening before
the Pentagon statement was released. "We hope the suspension (of
Japan's fuel supply) will be as short as possible," he added.

Schieffer also brushed off the alleged diversion of MSDF-supplied
fuel for operations in Iraq. "I can declare all the fuel was used
for Operation Enduring Freedom (OEF)," he told reporters at the
Foreign Ministry.

Tokyo baffled

Concerning the Pentagon statement over Japanese fuel supplied by the
MSDF to US warships in the Indian Ocean, the Japanese government
takes the position that the United States' denial of fuel diversion
basically remains unchanged. However, the Pentagon statement also
bewildered the Japanese government since it implies that the US
government cannot definitely say all fuel was used for Operation
Enduring Freedom (OEF) in Afghanistan.

"They say the United States couldn't track the use of all fuel," a
senior official of the Foreign Ministry said early this morning.
"But," the official also said, "they didn't tell us they would
release a report to that effect." The official added, "We heard that
they would say all the fuel provided by Japan was used for Operation
Enduring Freedom."

In response to the Pentagon statement released this time, the
government and the ruling parties are concerned about possible
repercussions on Diet deliberations starting Oct. 23 on the new
antiterror legislation. "It will give momentum to the opposition
bench that is opposed to the bill," an executive of the ruling
Liberal Democratic Party said, adding, "It may also affect its
passage during the current Diet session."

2) US denies diversion of MSDF-supplied fuel: Government takes
statement as "sincere": Opposition parties determined to continue
its pursuit, claiming suspicion of diversion has grown deeper

NIKKEI (Page 2) (Full)
October 19, 2007

The US government has issued a statement concerning the Maritime
Self-Defense Force's (MSDF) refueling operations in the India Ocean.
The Japanese government highly evaluated the statement with one
senior Foreign Ministry official noting, "The US announced the
result of its investigation, which has been carried out with honesty
and sincerity." However, since the statement does not totally rule
out the possibility of the fuel provided by the MSDF having been
used for purposes other than antiterror operations in Afghanistan,
opposition parties are bound to strengthen their pursuit.

The Japanese government had stressed that the fuel supplied by Japan
was used properly, as Prime Minister Fukuda put it. The US
government's statement noted that the US government reassures to the
Japanese government that the fuel provided by Japan was used for the
Operation Enduring Freedom (OEF). The government wants to seek
understanding from the opposition camp, by stressing this point in

TOKYO 00004879 003 OF 008

deliberations on the new refueling legislation.

However, opposition parties, such as the Democratic Party of Japan
(DPJ or Minshuto), are determined to heighten their criticism,
noting that there are even deeper suspicions of diversion now.
Heated exchanges on this can be expected during deliberations on the
bill.

3) Defense Minister Ishiba willing to release some ship logs on
Indian Ocean refueling operations if the opposition parties request
such (Yomiuri)

YOMIURI (Page 4) (Full)
October 19, 2007

Defense Minister Ishiba appearing on a CS television program
yesterday stated that he was willing to release some of the ship
logs still being stored if the opposition parties would request
such. He also said: "Disclosure standards vary depending on the
country. Material that would pinpoint the location of ships could
not be disclosed."

Regarding the discarding of some ship logs from the Towada, a supply
ship that has carried out refueling operations in the Indian Ocean,
Ishiba made it clear: "The person responsible made a mistaken
decision (about the time limit for preserving documents) and
shredded the material."

4) "We will secure Diet passage for the bill during the current
session," senior government and ruling camp officials underscore

YOMIURI (Page 4) (Full)
October 19, 2007

Senior officials of the government and the Liberal Democratic Party
(LDP) yesterday once again stressed their intention to obtain Diet
approval during the current session of for a new antiterrorism
special measures bill intended to continue the Maritime Self-Defense
Force's (MSDF) refueling operations in the Indian Ocean.

Chief Cabinet Secretary Machimura during a plenary session of his
faction stressed, "I will tackle the issue with an indomitable
resolve to secure Diet approval during the current session." One
high-ranking LDP official noted, "We will never allow the bill to be
carried over to the next session for deliberations in the Lower
House. We must send it to the Upper House and bring the Democratic
Party of Japan's (DPJ or Minshuto) stance toward the terrorism issue
to a head." He thus indicated his party's intention to send the bill
to the Upper House after securing approval from the Lower House at
an early date.

Prime Minister Fukuda yesterday evening said, "Now that we have
submitted the bill, we have no choice but to do our utmost to secure
Diet approval." He made this comment to reporters at the Prime
Minister's Office (Kantei).

5) British prime minister in telephone conversation with Prime
Minister Fukuda expresses hope for continued MSDF operation in the
Indian Ocean

YOMIURI (Page 4) (Excerpt)
October 19, 2007

TOKYO 00004879 004 OF 008

Prime Minister Fukuda and British Prime Minister Brown held a
telephone conversation yesterday in which Fukuda explained that his
government had presented to the Diet a new antiterrorism special
measures bill that would continue refueling operations by the
Maritime Self-Defense Force in the Indian Ocean. Prime Minister
Brown expressed his hope that the operations would continue, saying,
"I would like Japan to continue its close cooperation (with its
anti-terror measures)."

On the Burma (Myanmar) issue, Prime Minister Fukuda explained: "We
are working on (the military junta) to release political prisoners
and enter into a dialogue with democratization forces." Prime
Minister Brown expressed appreciation for Japan's efforts.

6) DPJ trying to bog down Lower House deliberations by submitting
bill calling for abolishing Iraq law

MAINICHI (Page 2) (Full)
October 19, 2007

Deliberations on the new antiterrorism bill will start in a House of
Representatives plenary session on Oct. 23. Prior to this, the
Democratic Party of Japan (DPJ) yesterday submitted a bill calling
for scrapping the Iraq Reconstruction Support Special Measures Law
to the House of Councillors. The main opposition party is grilling
the government on the allegation of diversion of fuel supplied by
the Maritime Self-Defense Force in the Indian Ocean for use in the
Iraq war. The DPJ is aiming to also bog down to the deliberations in
the Lower House, on the strength of its holding a majority in the
Upper House.

Upper House member Keiichiro Asao, who submitted the bill,
emphasized in a press conference: "We will naturally pursue the
diversion allegation in the deliberations, as well as the
government's new antiterrorism bill."

The DPJ will ask relevant cabinet ministers, including Chief Cabinet
Secretary Nobutaka Machimura and Defense Minister Shigeru Ishiba, to

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attend both meetings of the Lower House antiterrorism and Iraq
support special committee and the Upper House's foreign and defense
committees. Taking advantage of its control in the Upper House's
committees, the DPJ is poised to undermine the ruling camp's
leadership in Lower House deliberations.

7) New antiterror counterproposal: DPJ likely to face rough going in
consolidating views, with many members harboring deep concern about
participation in ISAF; Leadership having difficulty making
judgments

YOMIURI (Page 4) (Full)
October 19, 2007

The Democratic Party of Japan (DPJ or Minshuto) yesterday started
efforts to finalize its counterproposals to the government's new
antiterror special measures bill. However, it has yet to consolidate
views within the party, such as whether to submit a set of
counterproposals in the form of a bill and whether to incorporate
the dispatch of Self-Defense Forces (SDF) troops in it. The
leadership will likely be pressed to make difficult judgments.

President Ozawa, Policy Research Council Chairman Majima and several

TOKYO 00004879 005 OF 008

others conferred in the Diet on the basic aspects of the
counterproposals. They agreed in general on an approach of
incorporating measures focused on basic human needs and
reconstruction assistance, such as education and medical services -
all activities related to the International Security Assistance
Force's (ISAF) operations in Afghanistan. On the question of
dispatching SDF personnel to Afghanistan, the conferees looked into
the possibility of SDF troops engaging in security duties, as well
as assisting the reconstruction of schools and hospitals.

Secretary General Hatoyama during a meeting of the Foreign Affairs

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and Defense Division indicated his intention to speed up the work of
drafting a set of counterproposals. However, participants noted that
there must be more intraparty discussions. Regarding the idea of
dispatching SDF troops, a negative view prevailed at the meeting
with one member saying, "Japan should specialize in assistance for
basic human needs, such as assistance in medical services and
economic reconstruction areas."

There is a deep-seated concern in the party about Ozawa's proposal
for taking part in the ISAF. That is because many members are
dissatisfied that since Ozawa has not explained his view clearly,
they cannot reply to questions asked by supporters, as a mid-ranking
member put it.

The views of senior officials are not unanimous regarding the
treatment of counterproposals. Deputy President Kan told a press
conference yesterday, "If the government is determined to railroad
its proposal, there will be a probability of the DPJ submitting its
proposals in the form of a bill. However, if the government gives up
on its passage, the propriety of submitting such a bill is
questionable." He thus indicated his stance of determining what move
the government and the ruling camp will make. In contrast, Hatoyama
categorically told a news conference on the evening of Oct. 17, "I
want to show our proposals to the public in the form of a bill."

8) DPJ agrees to prior talks with ruling camp to unify bills
amending Political Funds Control Law

YOMIURI (Page 2) (Excerpts)
October 19, 2007

The Democratic Party of Japan (DPJ) decided yesterday to start talks
with the ruling coalition to unify both sides' bills amending the
Political Funds Control Law. DPJ Diet Affairs Committee Chairman
Kenji Yamaoka will meet separately with his counterparts of the
Liberal Democratic Party (LDP) and the New Komeito to explain the
contents of the DPJ bill and call for their cooperation.

The main opposition party had indicated an unwillingness to respond
to a call by the ruling camp for holding talks before the party
submits its bill. However, the DPJ, probably reflecting high public
interest in the "politics-and-money" issue, decided to take a
flexible stance on proposed talks.

President Ozawa, Secretary General Hatoyama and other members of the
DPJ agreed in an executive meeting yesterday that the party would
listen to views from the ruling coalition before it submits its bill
to the Diet and study the possibility of partially correcting the
bill in order to obtain cooperation from the coalition. The DPJ
intends to aim at coming up with a unified bill by holding
deliberations with the ruling coalition in the Diet even after it

TOKYO 00004879 006 OF 008

presents the bill.

9) Tokyo district prosecutors question former Yamada Corp executive,
who is close to former Vice Defense Minister Moriya, on suspicion of
breach of trust

SANKEI (Top play) (Abridged slightly)
October 19, 2007

A group of former executives of Yamada Corp., a Minato Ward,
Tokyo-based major trading company specialized in defense products,
including a 69-year-old former senior managing director, is
suspected to have misappropriated funds by manipulating accounting
books during their employment at the company, sources familiar with
the matter revealed yesterday. Yamada Corp has filed a 1.5 billion
yen damage suit against executives of Nihon Miraise Corp. (NMC), a
defense trading firm founded by the former executive and others.
Paying close attention to a series of developments, the Tokyo
District Public Prosecutors Office's special investigation team
seems to have questioned persons concerned, including NMC
executives, on suspicion of aggravated breach of trust.

According to the sources, the former executive while at Yamada
played a central role in promoting business with US arms makers and
the Defense Agency (currently the Defense Ministry) and laying the
groundwork in the political world. Being on friendly terms with
former Vice Defense Minister Takemasa Moriya and other senior
Defense Ministry officials, he also allegedly played golf and dined
and wined with them for a dozen or so years. Part of the
misappropriated funds might have been used for entertaining them.

Yamada Corp. was established in 1969 by spinning off from a real
estate company. Growing into a major defense trading firm
specializing in aviation, Yamada began being designated as Japanese
agents by US arms makers from about 15 years ago. Today, the firm
holds an important position in the defense industry packed with
leading trading companies.

The former executive left Yamada in June 2006 to establish NMC with
a dozen or so former Yamada employees in September. According to the
sources, suspicions arose later on that NMC executives had
misappropriated funds while they were with Yamada.

NMC was joined by many former Yamada employees who were responsible
for US General Electric, with which Yamada was in contract on
shipping the new engine in the Air Self-Defense Force's
next-generation transport place (CX). This led Yamada to accuse of
trying to steal its CX engine partner. Yamada filed last October a
damage suit with the Tokyo District Court, demanding NMC employees,
including the former executive, pay 1.5 billion yen by February 2007
and return part of the retirement allowances of its former
employees.

The special investigative team seems to have interviewed executives
of the two firms, believing that the former executive and others
have committed accounting misdeeds in connection with the merger of
a related company while working at Yamada.

10) Former Vice-Defense Minister Moriya played golf with arms
supplier in violation of SDF regulation

ASAHI (Top play) (Excerpts)

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October 19, 2007

Former Vice Defense Minister Takemasa Moriya, 63, during his term of
office played golf on several occasions with a former executive of
Yamada Corp., a Minato Ward, Tokyo-based military trading firm,
sources familiar with the matter have revealed. Moriya's wife
occasionally accompanied him, according to the sources. Playing golf
with concerned parties (defense contractors) is prohibited under the
Self-Defense Force code of ethics. He would have been subject to
punishment if he were still in office. The top SDF official
repeatedly violated the law.

Yamada Corp.'s sales for FY2005 amounted to 34 billion yen. Of it,
9.41 billion yen came from orders from the Defense Ministry. The
company's shipments included two engines (1.2 billion yen) in the
Air Self-Defense Force's next-term transport plane CX.

While at Yamada, the former executive became chief of the section
handling aircraft parts in 1990. According to the sources, Moriya
developed a deep personal relationship with the former executive
over the years. The two began playing golf together several years
later. At the initial stage, the former executive coached Moriya.
They played together at golf courses in such places as Saitama and
Chiba that were run by a company connected with Yamada Corp. Moriya
showed up with his wife from time to time, and the former
executive's subordinate provided transportation for her. The former
executive continued to play golf with Moriya until late 2005, six
months before he quit Yamada. They played together as many as three
times a month. In some years, they played golf over 10 times,
according to the sources.

11) Government eyes smaller cut in host nation support

MAINICHI (Page 2) (Full)
October 19, 2007

Prior to the start of negotiations between the governments of Japan
and the United States on a new special agreement to replace the
current one, which expires next March, Japan decided to slash its
sympathy budget for US forces in Japan. But now, giving
consideration to the US, the government is mulling smaller cuts in
the special measures agreement portion that totals approximately 140
billion yen. With this possibility in mind, discussions began
yesterday. Japan is concerned that if the two governments clash over
Japan's host nation support at a time when it is almost certain the
Maritime Self-Defense Force's (MSDF) refueling mission in the Indian
Ocean will be suspended, there could be a serious impact on the
bilateral alliance. Prime Minister Fukuda is expected to inform
President Bush of this plan during his visit to the US in November.

The 140.9 billion yen allocated under the special measures agreement
that went into effect in 2006 covers 115 billion yen in salaries for
(Japanese) employees of US bases and 25.3 billion yen in utility and
water costs.

The government initially eyed a greater reduction in utility and
water expenses, but some officials worried about a negative impact
on the Japan-US alliance, as a senior Foreign Ministry official
said: "A cut in the sympathy budget, in addition to the expected
suspension of the MSDF mission, would harm the bilateral alliance."

The US government has asked Japan to significantly increase its

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outlays, citing growing threats from arms buildup by North Korea and
China. Reflecting this call, the government is studying a cut by
only several hundreds of millions of yen. Since it is necessary to
include the necessary outlays in next fiscal year's budget, the
government intends to speed up the calculation of the funds needed
and conclude talks with the US by the end of November.

12) Futenma panel to resume next month

YOMIURI (Page 2) (Full)
October 19, 2007

The government firmed up its intention yesterday to resume its
consultative meeting in November with officials from Okinawa's
prefectural and municipal governments on the pending issue of
relocating the US Marine Corps' Futenma Air Station in the city of
Ginowan, Okinawa Prefecture, to a coastal area of Camp Schwab, a US
military base in the island prefecture's northern coastal city of
Nago. The government has held no consultative meeting with Okinawa
over the Futenma issue since January. However, Prime Minister Fukuda
is scheduled to make his first official visit to the United States
in November. With his US visit ahead, the government apparently
deemed it necessary to go ahead with the planned relocation of
Futenma airfield in the process of realigning US forces in Japan.

Chief Cabinet Secretary Machimura yesterday told Defense Ministry,
Foreign Ministry, and Cabinet Office officials to push for
coordination with Okinawa Prefecture and its base-hosting
localities. Machimura is scheduled to meet with Defense Minister
Ishiba and Foreign Minister Komura today to discuss Futenma
relocation.

13) Parliamentary abduction league to send delegation to US for
first time later this year

SANKEI (Page 5) (Full)
October 19, 2007

The parliamentary league on the abduction issue, chaired by Takeo
Hiranuma, in a meeting in the Diet Building yesterday, formally
decided to send delegations to the United States and South Korea
before the end of the year. This is the first time that the
parliamentary abduction group has decided to send delegations
overseas. The delegations will be accompanied by members of the
Association of the Families of Victims of Kidnapped by North Korea
(AFVKN)

In the United States, where there are moves to delist North Korea as
a state sponsor of terrorism, the group intends to conduct in-depth
discussions with Representatives who have submitted to the House a
bill placing new conditions on the removal of sanctions. They also
plan to share the perception about the issue with South Korea
legislators. AFVKN Representative Shigeru Yokota, who attended the
meeting, expressed hope for good results, saying, "Exchanges between
legislators (of Japan, the United States, and South Korea) will
result in tremendous energy."

SCHIEFFER

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