Cablegate: Daily Summary of Japanese Press 12/06/07

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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 12/06/07

Index:

(1) U.S. Deputy Chief of Mission expresses hope for early resumption
of refueling operation (Sankei Net)

(2) Government, ruling coalition to arm themselves with theoretical
backing in order to take re-vote on new antiterrorism legislation,
noting that a censure motion has no "legal binding force" (Yomiuri)

(3) Fukuda beginning to demonstrate his imprint in foreign and
security policies; Foreign policy study panel's inaugural meeting
set for Dec. 9 (Yomiuri)

(4) Debate over "buried money" to fund fiscal reconstruction heating
up in LDP; Nakagawa suggests using reserve funds in special accounts
(Nikkei)

(5) DPJ Tax System Research Commission starts discussion:
Reallocation of national auto tax revenues; Child allowance in place
of dependent exemption (Mainichi)

(6) Editorial: Urgency of Defense Ministry reform to prevent the
ministry from producing another "Moriya" (Mainichi)

ARTICLES:

(1) U.S. Deputy Chief of Mission expresses hope for early resumption
of refueling operation

SANKEI NET (Full)
1:30, December 6, 2007

United States Deputy Chief of Mission to Japan Joseph R. Donovan
gave an interview to the Sankei Shimbun in Osaka yesterday.
Referring to the new antiterrorism special measures bill, now under
discussion in the House of Councillors, Donovan expressed hope for
an early enactment of the legislation, saying: "We hope that Japan
will find a way to resume the refueling mission in the near future."
He also emphasized the significance of Japan's activities in the
international community by touching on the fact that when the
Maritime Self-Defense Force's supply ship returned home following
the expiration of the Antiterrorism Special Measures Law, it was
received by the ambassadors of various countries, including Pakistan
and Afghanistan.

Referring to the planned six-party heads-of-delegation meeting on
the North Korean nuclear issue, Donovan noted: "North Korea should
declare that it will end all its nuclear-related activities and
nuclear development programs by the end of the year." He added that
(the United States) will not delist North Korea as a state sponsor
of terrorism "unless there is progress in the six-party talks and an
agreement is reached in the process of the talks."

Touching on the relationship between Japan and North Korea, he
stated: "We will urge North Korea to improve its relationship with
Japan. Our position is that the abduction issue in particular is
included." He indicated that the U.S. stance of placing priority on
the abduction issue will not change. Moreover, on the possibility of
Assistant Secretary of State Christopher Hill, chief U.S. delegate
to the six-party talks, visiting Japan before year's end, Donovan
indicated that the United States will work in close cooperation with
Japan.

TOKYO 00005474 002 OF 007

U.S. Deputy Chief of Mission Joseph R. Donovan speaks to Sankei
Shimbun on Dec. 5 at the U.S. Consulate General in Kita Ward,
Osaka.

(2) Government, ruling coalition to arm themselves with theoretical
backing in order to take re-vote on new antiterrorism legislation,
noting that a censure motion has no "legal binding force"

YOMIURI (Page 4) (Full)
December 4, 2007

The government and the ruling coalition are beginning to prepare
themselves for a theoretical argument in order to again put to the
vote the new antiterrorism special measures bill in the Lower House
in the event that the bill is rejected by the Upper House or in the
event that the bill is deemed "rejected" by the Upper House. The
government and the ruling coalition are taking the position that
since the Constitution allows a re-vote, even though the opposition
bloc plans to submit a censure motion against the prime minister,
that motion has no legal binding force. Meanwhile, the major
opposition Democratic Party of Japan (DPJ), which has become the
first party in the Upper House as a result of this summer's Upper
House election in July, is opposing the move by the government and
the ruling bloc to take a re-vote, arguing that the will of the
people shown in the Upper House election will be denied.

Ruling bloc wants to avoid dissolution of Lower House

Meeting the press on Dec. 3, the ruling Liberal Democratic Party's
(LDP) Secretary General Ibuki emphasized his intention to devote
himself to passing the new antiterrorism legislation. When asked
about taking a re-vote on that bill, Ibuki said: "We have yet to
study that option."

Contrary to his remark, however, the LDP has already finalized an
internal report on a re-vote and the validity of a censure motion.
The report notes: (1) The Lower House's choice overrides the Upper
House's choice, for instance, in the Diet's nomination of a prime
minister, and the functions of the Upper House are limited to
"supplementing the Lower House and laying restraint on the Lower
House's activities" and (2) even though the Upper House may adopt a
censure motion against the prime minister, the motion has no legal
binding force.

These points in the report are in line with a set of proposals
released in November by the National Council for Building a New
Japan, a forum consisting of Kikkoman Corp. Chairman Yuzaburo Mogi,
Gakushuin University Prof. Takeshi Sasaki, and others.

The council's proposals conclude that a censure motion submitted by
the Upper House has no validity, citing such constitutional
provisions as Article 63, which says the prime minister and cabinet
members can attend the Diet session at anytime, Article 67, which
says the Diet's lower chamber's choice overrides the upper chamber's
choice in the Diet's nomination of a prime minister, and Article 69,
which says it is the lower chamber that can pass a no-confidence
motion against the prime minister.

Prime Minister Fukuda, as well, told reporters in Singapore on Nov.
21: "I wonder whether there is someone who can censure me." Fukuda
cast doubts on the move by the opposition bloc to submit a censure

TOKYO 00005474 003 OF 007

motion on the grounds of the ruling bloc taking a re-vote.

When it comes to the Lower House approving bills rejected by the
Upper House, there has been only one such case, namely, a bill
allowing motor boat races was re-adopted in June 1951. When it comes
to cases of the Lower House approving a bill that were rejected by
the Upper House, there also has been only one, namely, a special
measures bill for the transfer of assets under a special account for
national hospitals.

The ruling parties are concerned that taking a re-vote may be viewed
by the public as a high-handed approach. So, from now on they intend
to assert that while it is unusual to take a re-vote, doing so is
justifiable.

The ruling parties' move to arm with theoretical backing regarding a
re-vote reflects their ulterior motive to avoid the case of
dissolving the Lower House for a snap general election.

There is the indication that if a re-vote is taken, the DPJ would
adopt a censure motion against the prime minister (in the Upper
House), thereby throwing the Diet into confusion and driving the
ruling bloc into dissolving the Lower House. In order to avoid this
possibility, the ruling parties intend to emphasize that a censure
motion has no legal binding force.

DPJ highlights the people's will

Meanwhile, the DPJ's Diet Affairs Committee Chairman Kenji Yamaoka
said that the case of the Lower House overriding a bill rejected by
the Upper House "would mean the Lower House has rejected the
people's will."

On Nov. 3, Yamaoka met separately with Deputy President Kan,
Secretary General Hatoyama, and DPJ Upper House Caucus Chairman

SIPDIS
Azuma Koshiishi and discussed how to deal with the new antiterrorism
legislation. As a result, they agreed that the party would put
together a set of problems about a re-vote and use them to form the
party's unified view.

The DPJ's Upper House Diet Affairs Committee Chairman Susumu Yanase,
too, insisted on his website that day: "If the LDP and the New
Komeito re-adopt a bill that has split public opinion into two, then
the Lower House should be dissolved immediately. This matter has
nothing to do with the question of whether a censure motion
submitted to the Upper House is adopted."

(3) Fukuda beginning to demonstrate his imprint in foreign and
security policies; Foreign policy study panel's inaugural meeting
set for Dec. 9

YOMIURI (Page 4) (Abridged slightly)
December 6, 2007

Chief Cabinet Secretary Nobutaka Machimura announced in a press
conference yesterday that the Foreign Policy Study Council (Gaikou
seisaku benkyoukai), chaired by National Defense Academy President
Makoto Iokibe, an advisory panel to Prime Minister Yasuo Fukuda,
will hold its inaugural meeting at a Tokyo hotel on Dec. 9. Two
months into office, Prime Minister Fukuda is now trying to establish
a diplomatic system led by Kantei (Prime Minister's Official
Residence) with an eye on the planned visit to China and the G8

TOKYO 00005474 004 OF 007

Summit, which Japan will host next July in the Lake Toya hot-spring
resort area in Hokkaido.

The council comprising eleven individuals specializing in such
fields as diplomacy, security, and global economy will frankly
exchange views with the prime minister on foreign policy while
dining. Chief Cabinet Secretary Machimura and Assistant Deputy Chief
Cabinet Secretary Hiroyasu Ando will also join as necessary.

Machimura told the press conference: "Having a variety of
information will help the prime minister perform summit diplomacy
that is broad and deep."

The council is modeled after the task force on external affairs,
which Fukuda ran as chief cabinet secretary under the former Koizumi
administration. The council includes many task force members, such
as Yukio Okamoto who chaired it.

Important diplomatic events are lined up for the prime minister,
such as a visit to China, the Tokyo International Conference on
African Development (TICAD) to be held in Yokohama next May, and the
G8 Summit. Fukuda seemingly wants to boost his presence in the
international community. "The question is how much Prime Minister
Fukuda can demonstrate his policy imprint by the G8 Summit," a
person close to Fukuda said.

Fukuda has been busy dealing with Diet affairs these days. Although
his administration is still being challenged to quickly pass the new
antiterrorism legislation, Fukuda's apparent determination to expand
his knowledge of diplomacy and security, his forte, seems to reflect
his calm calculation in running his administration.

He has also embarked on a Kantei-led effort to reform the
scandal-prone Ministry of Defense (MOD) by establishing a MOF reform
council composed of experts and Machimura.

Foreign Policy Study Council members: Makoto Iokibe (chair),
president of National Defense Academy; Yukio Okamoto, former adviser
to the prime minister; Masao Okonogi, professor at Keio University;
Shinichi Kitaoka, professor at the University of Tokyo; Yorihiko
Kojima, vice-chairman of the Japan Association of Corporate
Executives; Kyosuke Shinozawa, former president of the Japan Bank
for International Cooperation; Takashi Shiraishi, vice president of
National Graduate Institute for Policy Studies; Akihiko Tanaka,
professor at the University of Tokyo; Sakutaro Tanino, former
ambassador to China; Hiroshi Nakanishi, professor at Kyoto
University; and Osamu Watanabe, former chairman of the Japan
External Trade Organization.

(4) Debate over "buried money" to fund fiscal reconstruction heating
up in LDP; Nakagawa suggests using reserve funds in special
accounts

NIKKEI (Page 2) (Full)
December 6, 2007

Debate on whether surplus money to finance fiscal reconstruction
measures exists in the government is heating up in the Liberal
Democratic Party. Former Secretary General Hidenao Nakagawa, who
places importance on growing the economy, has said that there are
reserve funds in special accounts, but lawmakers placing emphasis on
fiscal reconstruction are reacting to remarks by such pro-growth

TOKYO 00005474 005 OF 007

lawmakers implying the avoidance of a hike in the consumption tax.
The dispute over economic policy in the LDP may affect work of
compiling next fiscal year's budget.

Delivering a speech at an end-of-year gathering of economists held
in Tokyo last night, Nakagawa revealed that he had suggested to
Prime Minister Yasuo Fukuda just before the gathering that the
government should use reserve funds in special accounts. Nakagawa
said: "I told (the prime minister) about where surplus money is
kept. Prime Minister Fukuda was already aware of the location."

The buried funds mentioned by Nakagawa point to reserve funds in the
Fiscal Loan Fund Special Account and in the Foreign Exchange Fund
Special Account, totaling approximately 40 trillion yen. Nakagawa
also proposed lowering the ratio of reserve funds to the total asset
of the Fiscal Loan Funds Special Account, as well as moving more
profits from managing the latter account to the general account.

Chief Cabinet Secretary Nobutaka Machimura said in a press briefing
yesterday: "It is unreasonable to say that you may spend money
lavishly because there seem to be surplus money." There are no signs
that the dispute will be settled soon.

(5) DPJ Tax System Research Commission starts discussion:
Reallocation of national auto tax revenues; Child allowance in place
of dependent exemption

MAINICHI (Page 5) (Full)
December 6, 2007

The Tax System Research Commission (chaired by Hirohisa Fujii) of
the Democratic Party of Japan (DPJ or Minshuto) has started
full-fledged discussions on annual tax code revisions for fiscal
2008. It plans to outline a tax code revision outline countering the
government-ruling camp-sponsored outline. The government is unable
to ignore the DPJ's move due to its dominance in the Upper House
since the July election. The DPJ is geared up to force the
government to dissolve the Lower House for a snap election, opposing
its budget bill, based on this outline. Focus will be a drastic
revision of special-purpose road construction funds and the income
tax.

Attaching importance to regional areas in the wake of the crushing
defeat in the Upper House election, the Liberal Democratic Part
(LDP) is insisting that special-purpose road construction revenues
should be allocated for other uses, after securing a road budget for
the consolidation of the road systems.

However, the DPJ is calling for allocating all special road
construction funds for other purposes. It wants to give the
impression that the LDP is negative toward reform, by proposing
scrapping temporary duty rates of the gasoline tax and establishing
an environment tax to be imposed on gasoline.

However, many members, mainly those who were elected in regional
constituencies are strongly against allocating road construction
funds to be used for other purposes. One lawmaker responsible for
national land and transport policy during an expanded meeting of
executives of the Tax System Research Commission, said, "We should
see how the situation develops, while keeping the special-purpose
road-construction revenues in place."

TOKYO 00005474 006 OF 007

The DPJ included in its manifesto for the Upper House election this
summer establishment of a 26,000-yen allowance per child. It eyes
abolition of spouse tax credit and dependent exemption as funding
resources for that.

However, the proposal has been criticized by the LDP, which is
negative toward revising the tax exemption system, because
households without children would have to share more burdens.

However, Motohisa Yoshikawa, vice chairman of the DPJ Tax System
Research Commission underscored: "The idea is that society is
responsible for posterity. The system will in the end lead to a
stable social security system."

The LDP has put off a consumption tax hike in fiscal 2008. The DPJ's
stance is to maintain the current rate of 5 PERCENT and allocate
all revenues for pension benefit payments. If the full amount is
allocated for pensions, revenues allocated to local governments
would run short. However, another proposal is securing funding
resources by establishing a new tax targeting companies.

(6) Editorial: Urgency of Defense Ministry reform to prevent the
ministry from producing another "Moriya"

MAINICHI (Page 5) (Full)
December 6, 2007

The Council of Experts on Reform of the Defense Ministry has begun a
debate to pave the way for drastic reform of the ministry as serious
problems involving the ministry gradually come to light. The panel
was formed under the initiative of the Prime Minister's Official
Residence (Kantei). It is said that the direct reason for setting up
the council is that Prime Minister Yasuo Fukuda became furious when
he heard of the cover-up by a Maritime Staff Office division
director of a data error about the amount of fuel provided by the
Maritime Self-Defense Force (MSDF) to a U.S. oilier. It is certainly
natural for the Prime Minister to feel a sense of crisis that
civilian control will be disrupted by the cover-up of data that is
used a material for defense policy making.

The situation has now become even more serious.

With former Administrative Vice Defense Minister Takemasa Moriya
having been arrested on charges of receiving bribes, we now know
that serious corruption in defense administration has been going
on.

The Moriya scandal appears to be linked not only to the cozy ties
between a defense bureaucrat and a company over the ministry's
procurement of defense equipment but also to defense interests
connected with politicians and Japan-U.S. relations. In order to
obtain the public's understanding, the council has to come up with
measures to reform the ministry to prevent a re-occurrence of such
corruption. The panel proposed carrying out civilian control in a
thorough manner, establishing stricter information security, and
procuring defense equipment in a transparent way. Although the
proposed items are interrelated issues, carrying out civilian
control in a thoroughgoing way is the main issue.

Based on a deep repentance for allowing the military to get out of
control in the prewar period, the concept of civilian control was
introduced in the process of the rearmament of Japan in the postwar

TOKYO 00005474 007 OF 007

era. Since the Meiji Constitution stipulated that the Emperor had
the right to control the military, the military was free from
parliamentary control. In the process of establishing the
Self-Defense Forces (SDF), it was decided that civilian control
would be carried out by "political control" by politicians elected
by the people and "official control" by defense bureaucrats.

The Moriya scandal has revealed a distorted system of civilian
control in which official control has expanded but political control
has become unreliable.

Moriya served as administrative vice minister, the highest defense
bureaucratic post, for four years and one month. During his tenure
as vice minister, the defense chief's post changed six times. It was
probably natural for Moriya, who was in charged of personnel changes
of defense officials almost nine years, including his tenure as
deputy vice minister, had a more powerful grip on the ministry than
did politicians.

It is stipulated that nine senior defense officials, including
administrative vice minister, as defense counselors should support
defense minister in drafting defense policy. However, there are
suspicions that Moriya was the real power in controlling the
ministry.

Unless politicians or the Diet have the necessary power to control
the SDF, measures to reform the ministry will not be effective.
Reform of the Defense Ministry will start with politicians becoming
the leading players in carrying out civilian control.

SCHIEFFER

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