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Cablegate: Japanese Morning Press Highlights 11/27/07

DE RUEHKO #5338/01 3310111
P 270111Z NOV 07





E.O. 12958: N/A


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1) Prime Minister's daily schedule (Nikkei)

Defense issues:
2) Former Vice Defense Minister Moriya to be questioned later this
week by prosecutors on suspicion of receiving bribes (Asahi)
3) Defense Ministry budgets for GSDF's AH64D helicopter, which at
21.6 billion yen a unit will be twice the cost of the world's most
expensive fighter, the F2 (Tokyo Shimbun)

Politics in flux:
4) Opposition camp in Diet wants to summon former defense chief
Nukaga as sworn witness, alleging he was wined and dined by shady
defense contractor (Mainichi)
5) DPJ President Ozawa warns of possibility of Diet being dissolved
early in 2008 (Asahi)
6) Prime Minister Fukuda, commenting on current political state,
cites adage: One inch ahead is darkness (Asahi)
7) LDP tax council, wary of public opinion, postpones discussion of
possible hike in consumption tax (Yomiuri)

North Korea problem:
8) Two Japanese experts join the team inspecting North Korea's
disabled nuclear facility (Yomiuri)
9) Government alarmed by discovery of Taiwan route for export of
precision Japan machinery to North Korea (Yomiuri)

10) Environment Minister Kamoshita reveals new plan to help poor
countries cut greenhouse gas emissions under post-Kyoto Protocol
regime (Sankei)


1) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, November 26

NIKKEI (Page 2) (Full)
November 27, 2007

Attended a welcome party for Vietnamese President Nguyen Minh Triet
and his wife at the Imperial Palace.

Met at the Kantei with Deputy Chief Cabinet Secretary Futahashi.
Followed by Deputy Chief Cabinet Secretary Iwaki.

Met Economic and Fiscal Minister Ota. Later met Chairman Kosai of
the government's Tax Commission.

Met Foreign Ministry's Asian and Oceanian Affairs Bureau Director
General Sasae. Followed by Chief Cabinet Secretary Machimura.

Attended an Upper House plenary session.

Met at the Kantei with Futahashi and Assistant Deputy Chief Cabinet

TOKYO 00005338 002 OF 008

Secretary Saka.


Attended a party executive meeting at the Kantei.

Attended a meeting of the Council on Economic and Fiscal Policy in
the Diet building.

Arrived at his official residence.

Attended a banquet with his wife for President Nguyen Minh Triet at
the Imperial Palace.

Returned to his private residence in Nozawa.

2) Tokyo District Prosecutors Office special investigation team to
conduct criminal investigation into Moriya this week on suspicion of
taking bribes

ASAHI (Top play) (Abridged slightly)
November 27, 2007

The special investigation squad of the Tokyo District Public
Prosecutors Office has decided to conduct before the end of the week
a criminal investigation into former Administrative Vice-Defense
Minister Takemasa Moriya, 63, on suspicion of taking a bribe from
Motonobu Miyazaki, 69, a former managing director of defense
equipment trading house Yamada Corp. who is already under arrest on
suspicion of corporate embezzlement and other charges, in the form
of free rounds of golf worth 5 million yen in total over the last
five years in anticipation of receiving favors in supplying defense
equipment to the Defense Ministry. Former Yamada boardroom chief
Tomonari Imaji, 57, under arrest for document forgery, who had
accompanied Miyazaki in treating Moriya to free golf outings, has
reportedly admitted that such entertainment was bribery.

Yamada President Yoshihiko Yonezu testified at the Diet that Moriya
had played golf more than 300 times at Miyazaki's expense in eight
years until March 2006 and that the cost, including the fees for
Miyazaki, came to over 15 million yen.

Of them, the special investigation squad has intensively
investigated the portion of the last five years that does not come
under the statute of limitations. Moriya has allegedly been treated
to free golf worth 5 million yen over the last five years.

Miyazaki reportedly began treating Moriya to free golf 12 years ago
when he was still Defense Policy Division director. Prosecutors
looked into whether a long period of entertainment could be
determined as bribery. As a result, they have concluded that Moriya
was aware that extravagant golf tours to such regions as Hokkaido,
Kyushu, Chugoku, and Hokuriku that cost Moriya several hundred
thousand yen each time was bribery. In addition, Imaji, who had
accompanied Moriya to a golf outing in April this year, has
reportedly admitted to investigators that they had treated Moriya to
free golf in the hope of receiving orders for defense equipment in

TOKYO 00005338 003 OF 008

The special investigation squad seems to have concluded that free
golf for Moriya was bribery by Miyazaki and others who had hoped
that Moriya would in return give favors to Yamada and Nihon Mirise
Corp., a defense equipment trading firm founded by Miyazaki in
September 2006, in supplying defense equipment to the Defense
Ministry. Prosecutors are expected to continue investigating the
case to find out whether or not Miyazaki had given a large sum of
money to Moriya.

Moriya served as administrative vice-defense minister from August
2003 through August 2007 when he retired from the ministry. It has
become clear that Moriya had repeatedly made comments defending
Moriya's Nihon Mirise from this spring through June over the
procurement of engines for the Air Self-Defense Force's CX
next-generation transport aircraft.

3) GSDF chopper costs 21.6 billion yen, nearly double world's most
expensive fighter jet

TOKYO (Page 1) (Abridged)
November 27, 2007

An attack helicopter, codenamed the AH-64D, is known for being
priced high. Its per-unit cost is 21.6 billion yen. Such an
expensive chopper is on the Defense Ministry's shopping list for the
Ground Self-Defense Force. The AH-64D is earmarked in the Defense
Ministry's budget estimate for next fiscal year. It is priced higher
than the F-2 support fighter, which was said to be "the world's most
expensive fighter plane" (approx. 12 billion yen per unit).
Moreover, the Defense Ministry will give up procuring the AH-64D
after fiscal 2009. The ministry will therefore have to select an
alternative model only eight years after its start of AH-64D

The AH-64D is the follow-on model to replace the GSDF's AH-1S
helicopter. The AH-64D chopper, developed by Boeing Co., a US
manufacturer of aircraft, is produced by Fuji Heavy Industries Ltd.
(FHI) under license. The AH-64D was adopted by the US Army and used
in the Gulf War. In addition, it was the world's strongest chopper
loaded with all-weather scouting fire control radar. These factors
led the Defense Ministry to select the AH-64D in 2001.

The AH-1S's cost was about 3 billion yen. Meanwhile, the AH-64D's
price was initially estimated at about 6 billion yen. Furthermore,
the AH-64D now uses more domestically produced parts. Its unit cost
has therefore skyrocketed in the past years.

The AH-64D's unit cost is estimated at 8.3 billion yen in the
Defense Ministry's budget request for next fiscal year. The Defense
Ministry will now give up on its AH-64D procurement after its
current midterm defense buildup plan for the period of five fiscal
years from 2005 to 2009. The Defense Ministry estimates 40 billion
yen for FHI's investments and will add this cost to the price of
three AH-64D helicopters to be procured in fiscal 2008 and 2009.

The AH-64D's per-unit additional cost is 13.3 billion yen, and its
end-user price is as high as 21.6 billion yen.

Procurement review needed

The Defense Ministry initially planned to procure a total of 62
AH-64D helicopters. However, the Defense Ministry has now decided to

TOKYO 00005338 004 OF 008

give up its AH-64D procurement after buying 13 units. This is deeply
related to Japan's national security. The primary reason for the
Defense Ministry's decision to give up on the AH-64D chopper is
Boeing's announced plan to discontinue production. Even so, money
can buy the follow-on model. However, the Defense Ministry deemed it
difficult to spend further on the AH-64D.

Aircraft procurement is almost always based on optimistic estimates.
The AH-64D was first estimated at about 6 billion yen. However, its
actual cost was close to that estimate only in 2002 when AH-64D
procurement started. The AH-64D's price annually went up. In fiscal
2006, its unit cost reached 10.5 billion yen. In the case of the F-2
support fighter jet as well, its initially estimated cost was about
5.4 billion yen. However, its price went up to 12.2 billion yen.

The defense industry pulls up the price with domestic production or
licensed production, and the Defense Ministry continues to buy its
products. There is such a pattern. There are also many golden
parachutists in the defense industry. This is also a factor that
causes doubts. "Domestic companies have technologies that can make
weapons halfway," a staff officer of the Self-Defense Forces noted.
"That's why," he went on, "the price goes up." He added, "There's no
problem in a country that has no choice but to buy weapons from the
United States because that country will buy them at the same time."

4) Opposition parties agree to demand Diet testimony by Nukaga,

MAINICHI (Page 5) (Full)
November 27, 2007

In connection with former Administrative Vice Defense Minister
Takemasa Moriya's sworn testimony in the Diet that Finance Minister
Fukushiro Nukaga was present at a dinner treated by Motonobu
Miyazaki, a former executive of the defense equipment trading house
Yamada Corp., who is under arrest, the main opposition Democratic
Party (DPJ or Minshuto) and three other opposition parties agreed
yesterday afternoon in a meeting of their Diet affairs committee
chairmen to demand that Nukaga and Moriya be summoned to testify as
witnesses before the House of Councillors Committee on Financial
Affairs. Prime Minister Yasuo Fukuda, however, backed Nukaga
yesterday in an Upper House plenary session, stating: "Mr. Nukaga
has given his account at press conferences and Diet committee
sessions. I want him to continue making efforts to compile the state
budget for next fiscal year." With the prime minister's clear stance
of supporting Nukaga, confrontation between the ruling and
opposition camps is intensifying over the testimony issue.

The DPJ has pursued Nukaga on the allegation that he was wined and
dined by Miyazaki along with Moriya, specifying the date, time and
place based on testimony the party obtained. Nukaga has, however,
totally denied the allegation, saying on Nov. 23: "The Diet member
should show us the seating list before questioning. His approach is
beneath the dignity of the Diet." In an informal directors meeting
of the Upper House Financial Affairs, the largest opposition party
yesterday requested Nukaga and Moriya be summoned to testify before
the committee, brandishing the threat of carrying out testimony by
taking a vote in the committee. DPJ President Ichiro Ozawa asserted
yesterday in Nagasaki City that the ruling camp should accept the
opposition's demand, saying, "If (Nukaga) has nothing to hide, he
should testify fairly and squarely."

TOKYO 00005338 005 OF 008

However, the ruling coalition has gradually stepped up its stance of
backing Nukaga. In a press conference yesterday, Chief Cabinet
Secretary Nobutaka Machimura sought to constrain the DPJ, saying:


"Mr. Nukaga has explained in an accurate fashion. I have a question
whether it is appropriate to subject a cabinet minister to testify
based on an allegation about which everybody knows there is no hard

If the opposition's pursuit of Nukaga, who is finance minister, is
prolonged, it will impact negatively on state budget compilation in
late December. The opposition camp predicts that if the allegation
is proved, Nukaga may have to step down. One ruling coalition member
said, however, "If the DPJ delves deep into the matter, it will
commit the same error as last year's e-mail fiasco."

5) DPJ President Ozawa: Lower House might be dissolved early in

ASAHI (Page 4) (Excerpts)
November 27, 2007

Democratic Party of Japan (DPJ) President Ichiro Ozawa told
reporters yesterday in the city of Otsu:

"In general, (dissolving the Lower House around the turn of the
year) is not necessarily good for the government and ruling parties,
but nobody knows what will happen at this time. It is fully possible
that it will occur early in the coming year."

He also stressed yesterday in a press conference in Nagasaki: "I
want to field candidates across the nation by the end of the year at
the latest so that we will be ready for an election if the Lower
House is dissolved soon." In his meeting yesterday with senior
Nagasaki Rengo (Japan Trade Unions Confederation) members, Ozawa
said: "It will be a decisive battle. Now the DPJ can fight the
election under the best conditions. I would like to file appropriate

Behind Ozawa having mentioned his prediction of a Lower House
dissolution is his attempt to dispel the notion that the time for a
dissolution is slipping away. He reportedly intends to file some 220
candidates by today and the remaining 30 by the end of the year.

Ozawa believes that the Fukuda administration has reached a dead end
earlier than expected. Some DPJ members have predicted that there is
a possibility that the prime minister will dissolve the Lower House
before maneuvering over the state budget between the ruling and
opposition parties begins next spring.

6) Prime Minister Fukuda: The future is unknowable

ASAHI (Page 4) (Full)
November 27, 2007

When asked by the press about his comment on Democratic Party of
Japan (DPJ or Minshuto) President Ichiro Ozawa's remark that the
Lower House might be dissolved early in the New Year, Prime Minister
Yasuo Fukuda responded yesterday:

"Politics has such an element. Nobody knows what will happen
tomorrow. . . . It is not good to predict what will happen in the

TOKYO 00005338 006 OF 008


7) LDP tax panel to put off discussion on consumption tax

YOMIURI (Page 1) (Full)
November 27, 2007

The Liberal Democratic Party's Tax System Research Commission,
chaired by Yuji Tsushima, launched full-fledged discussions on tax
reform for FY2008 in its general meeting at party headquarters
yesterday. The panel is expected to put off debate on bold reform
plans, including a hike in the consumption tax, and to discuss only
urgent priorities, such as measures to narrow regional disparities
in terms of tax revenues.

The key items to be discussed by the panel include future options
for such additional taxes as the gasoline tax exclusively used for
road construction after they expire next March. It also will discuss
whether to scrap tax breaks for investors, which halve the tax rate
on capital gains from 20 PERCENT to 10 PERCENT . This tax break is
scheduled to expire in FY2007. The LDP panel aims to draw up its
reform proposals in mid-December after consulting with the tax panel
of the New Komeito, its coalition partner.

On the consumption tax, the government's Tax Commission, an advisory
panel to the prime minister, and the LDP's Fiscal Reform Study
Group, chaired by Kaoru Yosano, proposed late this month that a
consumption tax hike should be discussed on the condition of
limiting the use of the additional income to spending on social
security. However, under the current political situation, in which
the House of Councillors is controlled by the Democratic Party of
Japan, which insists that the current 5 PERCENT rate should be
maintained, even if the coalition bloc submits related bills, there
will be no prospects for them to clear the Diet. With an eye on the
next House of Representatives election, many LDP members are also
opposed to a policy that will lead to a heavier tax burden.
Reflecting such calls, Prime Minister Fukuda had already revealed a
decision to forgo raising the consumption tax in FY2008 before the
LDP tax panel started discussion.

8) Six-party inspectors to begin inspecting disablement process at
Yongbyon today

YOMIURI (Page 2) (Abridged slightly)
November 27, 2007

The Chinese Foreign Ministry announced yesterday that officials from
Japan, the United States, China, and South Korea who are involved in
the six-party talks on North Korea's nuclear programs will visit
Yongbyon on Nov. 27-29 to check progress on the disabling of North
Korea's nuclear reactors.

Amid multilateral coordination for holding a meeting of the heads of
the six delegations for December, they are expected to check whether
there are any problems associated with disabling work.

According to the six-party agreement reached in October, North Korea
is required to disable the nuclear facilities at Yongbyon and
declare all its nuclear programs before the end of the year.

Two officials from Japan

TOKYO 00005338 007 OF 008

The Foreign Ministry announced yesterday that it would send two
ministry officials to Yongbyon for three days from Nov. 27 to
confirm progress on the disablement of nuclear facilities there.
This is the first time for the Japanese government to send personnel
to Yongbyon to join the on-the-spot examination of the
denuclearization of North Korea. The results will be reported to the
Dec. 6-8 six-party meeting, now under coordination.

Joining the on-the-spot inspection from Japan is Foreign Ministry
Nonproliferation, Science and Nuclear Energy Division Director
Tomiko Ichikawa and another official.

The Japanese government takes a positive view about bearing the cost
of denuclearization work, with a Foreign Ministry official saying,
"We will consider it positively if there is a request."

9) Government alarmed at "Taiwan route" of exports to North Korea

YOMIURI (Page 2) (Full)
November 27, 2007

A trading firm in Taiwan has exported precision equipment capable of
producing nuclear weapons-related materials to North Korea. The
Japanese government is now alarmed, with a senior Defense Ministry
official saying, "There is a possibility that Taiwan, which is not a
member of the United Nations, has been a loophole in control of
exports to North Korea."

Taiwan is not constrained by a series of sanction resolutions
adopted by the United Nations following the North's nuclear test
last year. Taiwan also has advanced technologies with possible
application to weapons of mass destruction, such as nuclear,
biological and chemical weapons.

The Japanese government is paying special attention to Taiwanese
investigators' discovery of yet another illicit export to North
Korea. A Foreign Ministry source said: "'The Taiwan route' will not
directly pose a serious threat to stability in Northeast Asia."
Nevertheless, the government is keenly interested in the specific
timeframe the North imported the precision equipment from Taiwan.

Pyongyang agreed this October to disable the nuclear facilities at
Yongbyon before the end of the year. The Foreign Ministry source
pointed out: "Although the North appears to be moving toward
denuclearization, if the import from Taiwan occurred just recently,
that doesn't match with what they are doing."

Although the Japanese government does not have diplomatic relations
with Taiwan, it intends to closely watch investigations by Taiwanese
authorities in the coming weeks.

10) Environment minister to propose plan to help island states,
poorest countries cut greenhouse gas emissions under post-Kyoto

SANKEI (Page 1) (Full)
November 27, 2007

In an interview with Sankei Shimbun yesterday, Environment Minister
Ichiro Kamoshita spoke of the measures the Japanese government plans
to take to contain global warming. In the 13th session of the
Conference of the Parties to the UN Framework Convention on Climate

TOKYO 00005338 008 OF 008

Change (COP13) in Indonesia on Dec. 3, in which a full-scale
discussion will start on ways to cut greenhouse gas emissions after
2012, when the Kyoto Protocol expires. Kamoshita will announce
Japan's plan to help island states and the poorest countries cut
greenhouse gas emissions. Under the plan, Japan aims to discuss
measures for such countries separately from those for developing
countries in Africa and for emerging countries such as China and

Kamoshita emphasized that priority should be given to building a
consensus among all participants in COP13. He said: "It is important
for all the members to reach an agreement in the process of making
rules. We must avoid a situation in which some countries drop out of
the new framework as a result of overly intense arguments."

Japan will renew its call for a special working group joined by all
the parties to be established under the COP to discuss a post-Kyoto
framework. Japan will also propose assistance measures to enable
economic growth in harmony with the environment for the poorest
countries in Africa and other areas, as well as island states such
as Tuvalu and the Republic of Kiribati, both of which may be
threatened by any future sea level rise because of the low

Kamoshita explained: "It is necessary for rising powers that are
expected to emit more greenhouse gases, such as Brazil, Russia,
India, China, and South Korea, to assume their due obligation." But
he also said: "It may become difficult to build a consensus if
overly tight restrictions are imposed on them," indicating a
cautious view about imposing similar strict restrictions on such
countries to those on industrialized countries.

The European Union (EU) is expected to announce by 2020 a plan to
cut greenhouse gas emissions by up to 30 PERCENT below 1990 levels.
On this possibility, Kamoshita commented: "It will be undesirable if
China, India and the United States refuse to join (the new
framework)." He then indicated that Japan would stop short of
mentioning any numerical targets, remarking: "We should not come up
with numerical targets."


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