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Cablegate: Daily Summary of Japanese Press 12/13/07

DE RUEHKO #5549/01 3470805
P 130805Z DEC 07





E.O. 12958: N/A


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(1) Poll on Fukuda cabinet, political parties, MSDF refueling
mission (Yomiuri)

(2) Asahi poll: 66 PERCENT of respondents say that regional
economies have come to a standstill due to sharp rise in crude oil
prices (Asahi)

(3) MSDF warship depot held huge party with 250 suppliers (Akahata)

(4) Former defense facilities administration bureau chief: Miyagi
governor also used good offices when he was prefectural assemblyman

(5) Future course of six-party talks: Question is whether North
Korea will report all its nuclear programs before year's end

(6) Steep road ahead for Japan to take initiative in environment
diplomacy (Tokyo Shimbun)

(7) Subprime loan calamity spreads: U.S. financial institutions
likely to incur largest losses in postwar period; Idea of injection
of public funds floated (Asahi)



(10) Prime Minister's schedule, December 12 (Nikkei)


(1) Poll on Fukuda cabinet, political parties, MSDF refueling

YOMIURI (Page 2) (Full)
December 11, 2007

Questions & Answers
(Figures shown in percentage. Parentheses denote the results of a
survey taken in November.)

Q: Do you support the Fukuda cabinet?

Yes 52.5 (52.2)
No 35.3 (36.0)
Other answers (O/A) 3.3 (3.3)
No answer (N/A) 9.0 (8.6)

Q: Which political party do you support now? Pick only one.

Liberal Democratic Party (LDP) 35.3 (34.3)
Democratic Party of Japan (DPJ or Minshuto) 17.1 (22.5)
New Komeito (NK) 2.5 (2.7)
Japanese Communist Party (JCP) 2.1 (2.3)
Social Democratic Party (SDP or Shaminto) 0.8 (1.1)
People's New Party (PNP or Kokumin Shinto) 0.3 (0.2)
New Party Nippon (NPN or Shinto Nippon) 0.1 (0.2)
Other political parties 0.2 (0.1)
None 40.8 (36.0)

TOKYO 00005549 002 OF 011


Q: Japan sent Maritime Self-Defense Force vessels to the Indian
Ocean under the Antiterrorism Special Measures Law. In the Indian
Ocean, they conducted refueling activities for vessels belonging to
the multinational forces engaged in antiterror operations in
Afghanistan. However, the law expired on Nov. 1. Japan has therefore
wound up its refueling activities there. Do you support continuing
the MSDF's refueling mission there?

Yes 47.5
No 41.1
N/A 11.3

Q: The government has now introduced a new bill to the Diet in order
to continue the MSDF's refueling activities in the Indian Ocean. The
new legislative measure limits the MSDF's activities in the Indian
Ocean to fuel and water supply only. This bill does not require the
government to ask the Diet for approval and sets the period of time
for MSDF activities in the Indian Ocean at one year. Do you support
this legislation?

Yes 44.7
No 42.6
N/A 12.7

Q: If this bill intended to continue the MSDF's refueling activities
is voted down in the House of Councillors, the House of
Representatives, in which the ruling coalition of the Liberal
Democratic Party and New Komeito holds more than two thirds of the
seats, can revote on it. Do you think it is appropriate to do so?

Yes 42.5
No 43.9
N/A 13.6

Q: Do you appreciate the DPJ's response in the current Diet

Appreciate very much 3.6
Appreciate somewhat 33.1
Don't appreciate very much 41.7
Don't appreciate at all 15.5
N/A 6.1

Polling methodology
Date of survey: Dec. 8-9.
Subjects of survey: 3,000 persons chosen from among all eligible
voters throughout the country (at 250 locations on a stratified
two-stage random sampling basis).
Method of implementation: Door-to-door visits for face-to-face
Number of valid respondents: 1,773 persons (59.1 PERCENT ).

(2) Asahi poll: 66 PERCENT of respondents say that regional
economies have come to a standstill due to sharp rise in crude oil

ASAHI (Page 1) (Full)
December 13, 2007

Asahi Shimbun carried out a survey of regional economies directed at

TOKYO 00005549 003 OF 011

business managers in 47 prefectures. Respondents who view the
regional economies as having come to a standstill reached 66 PERCENT
. The figure comes to 72 PERCENT , if those who replied, "Local
economies are declining slowly" and those who said, "Local economies
are worsening" are combined, up 24 points from the previous survey
in June. Their perception of the economy is extremely severe,
compared with the results of a survey of 100 leading companies
carried out in November. The outcome indicates that high crude oil
prices and stagnant consumption are dealing a further blow to the
already exhausted local economies.

The survey was carried out on Nov.15-30, targeting chambers of
commerce and industry and regional banks in 47 prefectures. It was
carried out, based on interviews with top executives, in principle,
and 94 replied.

Regarding the present state of the regional economies, 5 PERCENT of
pollees in the previous survey replied, "Regional economies are
expanding." However, no such replies were made this time. The number
of those who replied, "Local economies are gradually recovering,"
sharply dropped from 46 PERCENT to 28 PERCENT . Pollees who
replied, "Local economies have reached an impasse, but there are
some signs of improvement" increased from 31 PERCENT to 37 PERCENT
. Those who replied, "Local economies have come to a standstill"
increased from 15 PERCENT to 29 PERCENT . Those who replied, "Local
economies are slowing gradually," stood at 5 PERCENT . One percent
replied that local economies are deteriorating.

In a survey of 100 major companies carried out almost at the same
time, pollees who replied either "The economy is expanding" or "It
is recovering slowly" topped 60 PERCENT , though the figure dropped
from the June survey. In comparison, more respondents in regional
areas, where there are many mid-ranking, medium and small
businesses, felt that the economy is slowing. The Niigata Chamber of
Commerce and Industry president even said, "To begin with, there has
hardly been economic recovery for small- to medium-sized businesses
in our prefecture."

If business sentiments felt in each prefecture are divided into
three steps, the number of prefectures that see the economy
indicating "an expansionary or recovery trend" dropped from 27 to
14. The number of prefectures that see the economy "at a standstill
or in a temporary lull" increased from 20 to 31. Business sentiments
have improved only in Tokyo and two prefectures and deteriorated in
18 prefectures.

As future causes for concern (two replies were allowed), the largest
number -- 53 PERCENT -- of respondents cited "a rise in crude oil
prices," followed by "stagnant personal consumption" given by 30
PERCENT and "the future of the U.S. economy," cited by 23 PERCENT .
The results appear to have reflected the present situation where
pressure is put on small and medium-size businesses in terms of
income and earnings, because they are unable to pass the buck by
raising prices. Hyakugo Bank President Maeda expressed concern,
"Small and medium-size businesses are pressed to streamline their
companies. Gaps between leading companies and small- and medium-size
companies will further widen."

Regarding the gap between major cities and regional areas, 94
PERCENT of respondents gave the reply "widening."

(3) MSDF warship depot held huge party with 250 suppliers

TOKYO 00005549 004 OF 011

AKAHATA (Page 15) (Abridged slightly)
December 13, 2007

By military interest coverage team

A former administrative vice-defense minister has been arrested on
suspicion of taking bribes from a defense equipment trading house in
return for giving favors. The existence of cozy relations between
the Self-Defense Forces and their contractors is now a serious
problem. Under such circumstances, it was found through the
Akahata's investigation that the Maritime Self-Defense Force's
(MSDF) warship depot (Yokosuka City, Kanagawa Prefecture) that
repairs destroyers and submarines and procures their weapons and
equipment had thrown a large party for their suppliers at which
alcohol was served.

The party took place on Dec. 10 at Heiankaku Yokosuka in the city of
Yokosuka. The party started at 5:00 p.m. at a banquet hall following
a procurement coordination liaison meeting to announce changes to
the delivery methods that began at 3:00 p.m. The party was attended
by representatives of 250 suppliers and some 500 SDF personnel.

"We have never held such a huge party before," a depot official

In front of the banquet hall, the military interest coverage team
asked MSDF warship depot services and secretarial section chief, Lt.
Hiroyuki Morita what was the party for.

Lt. Morita explained: "Because the meeting brought together our
suppliers, we planned the get-together party after the meeting in
part to celebrate the depot's 90th anniversary."

Lt. Morita stressed that it did not violate the SDF code of ethics
because everyone -- the suppliers and SDF personnel alike -- paid
5,000 yen. He declined the team's request to let them cover the
party, saying: "There will be no speech by the depot chief; it's
just a buffet party."

Presenting their business cards, representatives of suppliers
greeted and chatted cheerfully one after another with the uniformed
officers lined up in the hallway. Sales representatives also
actively exchanged information, swapping their business cards.

The SDF explained that the procurement coordination liaison meeting
was held to inform the suppliers of the changes in the procurement
methods with the aim of correcting the problem of collusive ties
between the SDF and the military industry that escalated into the
arrest of the former vice-defense minister.

But why have a party with suppliers?

As if to exemplify improper relations with suppliers, it has just
come to light that the commander and senior officers of the Air
Self-Defense Force's Shariki detachment base in Aomori Prefecture
had attended a dinner party held by a supplier.

Warship depots' procurement costs are enormous. The great majority
of the expenditures are for discretionary contracts awarded (without
the bidding process) to major arms and military manufacturers that
hire a good number of retired Defense Ministry officials and SDF

TOKYO 00005549 005 OF 011


Defense contractor Yamada Corp., which had collusive ties with the
former vice-defense minister, is suspected to have padded bills for
landing crafts.

A former senior MSDF officer noted: "Changing the contract system is
aimed at removing such a collusive structure. Why was it necessary
to hold a wining-and-dining party with suppliers by taking advantage
of a meeting held for another purpose? Hungry for contracts,
suppliers that received invitations never miss such events. Many
suppliers make cash contributions when they have to miss such
parties. Collusive ties with suppliers are now a major problem, so
(SDF personnel) should demonstrate high morals."

A Ministry of Defense official said: "We are aware that the meeting
was held, but because the problem areas are not clear, I would like
to refrain from making any comment."

(4) Former defense facilities administration bureau chief: Miyagi
governor also used good offices when he was prefectural assemblyman

AKAHATA (Page 15) (Abridged slightly)
December 13, 2007

Former Sendai Defense Facilities Administration Bureau Director
General Nobumasa Ota held a press conference in Tokyo on Dec. 11
regarding allegations that lawmakers, such as Finance Minister
Fukushiro Nukaga, used their good offices over bidding for
construction work ordered by the former Defense Facilities
Administration Agency. Ota said: "In 1999, a general contractor was
introduced by Miyagi Governor Yoshihiro Murai, who was Miyagi
prefectural assemblyman at the time."

According to Ota's diary, Gov. Murai on Nov. 16, 1999, when he was
still a prefectural assemblyman, said to Ota on the phone: "The
chairman of the Association of General Contractors of Sendai wants
to have some drinks with you." Murai, along with the chairman,
called on Ota on Nov. 22, 1999.

The chairman said: "Please keep the association's member companies
in mind." He also reportedly said about the company run by him: "My
company has not been designated (by the bureau) as a bidder over a
dozen or so year years."

Ota has a list of good offices used by lawmakers, compiled by his
subordinate. The list has an entry saying that Gov. Murai introduced
a contractor that day.

Ota also revealed in the press conference that there had been
telephone calls from three individuals, including a senior official
and a former official of the then Defense Agency, and that some
contractors were introduced to him when he met them in person.

Following Ota's statement, Gov. Murai said on Dec. 11: "It is not
just possible. I have met Mr. Ota, but I have no recollection of
such a conversation. I am truly troubled. It's intolerable."

(5) Future course of six-party talks: Question is whether North
Korea will report all its nuclear programs before year's end

YOMIURI (Page 15) (Full)

TOKYO 00005549 006 OF 011

December 12, 2007

By Ichiro Ue, Yomiuri editorial writer

Ichiro Ue says that the highlight of the future course of the
six-party talks on North Korea's nuclear ambitions is whether the
North reports its nuclear programs before the end of the year.

The initial step of the implementation plan North Korea agreed in
the six-party talks was to suspend the operations of its three
nuclear facilities (a 5-megawatt nuclear reactor, a facility to
reprocess spent nuclear fuel rods, and a facility to fabricate spent
fuel rods) at Yongbyon, which is located in the northern part of
Pyongyang. North Korea implemented this first step in July.

It has been also decided in a joint document of the six-party talks,
which was issued after the Oct. 3 round of the multinational talks
that North Korea will disable the three nuclear facilities at
Yongbyon and report all its nuclear programs by Dec. 31, 2007.

There is a difference in the progress between the dismantlement and

North Korea has steadily moved ahead with the work of disabling the
three nuclear facilities, which started on Nov. 5 under the
initiative of the United States. US Assistant Secretary of State
Christopher Hill, who visited Pyongyang on Dec. 3-5, said: "The
process has been carried out smoothly." The work of extracting and
preserving fuel rods from the reactor will be started.

However, contrary to Hill's optimistic prospect, Pyongyang has not
presented any draft report of its nuclear programs. Hill talked
about his meeting with North Korean Vice Foreign Minister Kim Kye
Gwan after leaving Beijing: "There are gaps between the two sides."

In negotiating with Hill, the North Korean side reportedly stressed
its policy of taking "action for every action." It means that
Pyongyang demanded that other member countries of the six-party
talks give rewards in return for its effort to disable the nuclear
facilities and to report all its nuclear programs.

In return for suspending the nuclear facility operations and
disabling the three nuclear facilities, North Korea has been
promised that it will receive economic and energy support, such as 1
million tons of heavy oil. Excluding Japan, which has conditioned
its assistance for North Korea on progress in the abduction issue,
South Korea, Russia, China and the United States are each providing
the North with 50,000 tons of heavy oil.

Pyongyang has been trying to improve relations with the U.S., aiming
at concluding diplomatic ties with Washington, but it has shown
reluctance to report its nuclear programs. Still, the North seeks to
be removed from the U.S. list of states sponsoring terrorism.

The U.S. aim, however, is to permanently disable the Yongbyon
complex. The two countries have already engaged in maneuvering over
a report on the North's nuclear programs by Dec. 31.

Washington wants to have Pyongyang report all its nuclear programs,
while hinting at a possible improvement in bilateral relations,
which Pyongyang has long hoped for. North Korea, however, wishes to
underreport the plutonium it has for weapons use and to keep as many

TOKYO 00005549 007 OF 011

developed nuclear weapons as possible. This is the reason that the
North has stressed that the suspension and disablement of the
nuclear facilities are a measure for not increasing nuclear

U.S. Secretary of State Condoleezza Rice recently emphasized: "The
report should be complete and accurate." Hill is also seeking to
constrain North Korea, saying: "The report should mention not only
the present issues but also the past nuclear activities."

With a delay in the submission of the report, North Korea may try to
make the U.S. impatient. Pyongyang presumes that the Bush
administration will not destroy the framework of direct negotiations
between the two countries, as long as it is enthusiastic about
resolving North Korea's nuclear issues during its term, which will
run out in one year.

North Korea has invited the New York Philharmonic to Pyongyang next
January and the U.S. government gave approval to the tour. The North
appears to be trying to urge Washington to make a concession as
early as possible by producing a mood of close relations.

However, there is a doubt that the North Korea is really determined
to completely abandon its nuclear weapons in the end. It may dream
that it will join the international community still possessing
nuclear weapons like India and Pakistan. The North Korean media has
reiterated: "The issue of nuclear weapons should be discussed after
U.S.-North Korea relations are improved." Until then, North Korea
has no intention to abandon them.

If the U.S. makes an easygoing concession to North Korea and that
country joins the international community without abandoning its
nuclear weapons, it will remain a threat to Japan. Japan needs to
let the U.S. know its fears.

(6) Steep road ahead for Japan to take initiative in environment

TOKYO SHIMBUN (Page 1) (Full)
December 13, 2007

"Japan is willing to positively contribute to resolving environment
issues in the region by making use of its state-of-the-art
technology. Japan is in the position of leading the world (in the
environmental area)." Prime Minister Yasuo Fukuda proudly made this
statement in the East Asia Summit in Singapore on Nov. 21. He then
outlined Japan's support measures to protect the environment for
East Asian countries, centering on financial disbursements.

Cooperation from rapidly emerging countries in Asia is indispensable
in adopting a post-Kyoto framework that involves all countries. The
Japanese government envisions a scenario in which Japan would play
up its presence in Asia and take the initiative in international
negotiations that include the United States and China, both of which
are large emitters of global warming gases.

Prime Minister Fukuda has taken over the "Initiative to Cool Earth
50" advocated by former Prime Minister Shinzo Abe and has deemed the
issue of global warming as a key theme for his administration. The
prime minister set up the post of special advisor to the cabinet for
climate change issues this month and awarded the post to former
Ambassador in Charge of Global Environmental Problems Mutsuyoshi

TOKYO 00005549 008 OF 011

Nishimura, demonstrating his determination to address environmental
issues under the lead of the Prime Minister's Official.

Such efforts by Fukuda reflect his desire to exercise leadership at
the major summit conference (Lake Toya Summit in Hokkaido) next
summer, in which global warming will be high on the agenda. He also
aims to underscore achievements in the Summit by issuing a message
agreed by all industrialized countries.

Even so, it has been exposed at the ongoing 13th session of the
Conference of the Parties (COP13) to the United Nations Framework
Convention on Climate Change that there are wide perception gaps
over a post-Kyoto framework among participant countries. Japan takes
a neutral stance, so it volunteered to serve as a coordinator. But a
government source responsible for negotiations said: "A coordinator
will be made a victim of bullying," because of the wide gaps.

Japan is required to reduce greenhouse gas missions by 6 PERCENT
from 1990 levels under the Kyoto Protocol. In fiscal 2006, though,
Japan discharged 1,341 million tons of gases, up 6.4 PERCENT from
fiscal 1990 levels as a result of increases in gas emissions from
households and offices.

The government has decided to revamp its plan to attain the goal
this October and to come up with a revised version next March. But
many companies are negative about proposed further efforts. A senior
Foreign Ministry official grumbled: "Unless prospects are developed
for Japan to meet its gas-reduction target, it will be impossible to
propose a framework superior to the Kyoto Protocol."

The current unstable political situation caused by the ruling camp's
crushing defeat in the House of Councillors election in July is
casting a pall over Japan's efforts. Although the government had
decided that a new prime minister would deliver a speech in a United
Nations high-level meeting on climate changes held in New York in
September, since the Liberal Democratic Party presidential election
and the meeting were on the same day, former Prime Minister Yoshiro
Mori attended the meeting. The political situation is expected to be
unstable in the future. If the prime minister is preoccupied with
domestic affairs, he will be given no chance to demonstrate his
policy imprint in the environment area.

A steep path lies ahead for the prime minister, dogged by troubles
both at home and abroad, to assume leadership in environmental

(7) Subprime loan calamity spreads: U.S. financial institutions
likely to incur largest losses in postwar period; Idea of injection
of public funds floated

ASAHI (Page 3) (Excerpts)
December 13, 2007

No prospects are in sight for settling the issue of unrecoverable
subprime housing loans extended to people on low incomes. In an
unprecedented move, five central banks of the U.S. and Europe
announced on Dec. 12 a plan to inject in concert a large sum of
capital into the market. Fluctuations in the financial markets are
also linked to the soaring price of oil. There exists a serious
dilemma of inflation and low growth battering the world economy.

Sharp rise in prices of resources due to inflow of speculative

TOKYO 00005549 009 OF 011

funds: Japanese economy hard hit

The subprime crisis is shaking not only the U.S. but also the world
economy. Financial institutions in many countries have incurred
losses due to investment in securitized loans. The crisis has
ruptured the global flow of capital. The value of US stocks dropped
significantly last month. Crude oil prices are now at 100 dollars
(per barrel) for the first time. Soy bean futures have surged to a
34-year high. The price of gold, which has been regarded as a stable
asset for 28 years, has risen to a new high.

The unanimous view of market insiders is that an influx of a large
amount of speculative funds, such as hedge funds, has entered the
market. Hedge funds, having incurred losses due to the confusion in
the financial market, seem to have activated commodity investments,
expecting benefits from rising prices.

Sharp rises in resource prices will have a major impact on the
Japanese economy. The over-the-counter price of regular gasoline
(national average as of Dec. 10) was 155.5 per liter, up about 26
yen since April. The consumer price index (excluding perishable
foods) for October rose 0.1 point, compared with the previous year,
for the first time in 10 months. There is an observation that the
index would increase 0.7 points by next spring.

Small and medium-size businesses, which employ 70 PERCENT of
persons in employment, prefer to cut wages, finding it impossible to
raise the prices of their goods and services, according to the
Economist. The subprime crisis could deal a double whammy to the
family budget if retail prices are hiked and wages cut.

A trend to move away from the dollar will also accelerate.
Export-oriented companies have been booming. However, there is now
concern that their earnings could deteriorate. The Organization for
Economic Cooperation and Development (OECD) yesterday lowered
estimates for Japan's economic growth for 2007 and 2008 by 0.5
PERCENT to 1.9 PERCENT and 1.6 PERCENT respectively from its May


Asahi, Mainichi, Nikkei & Tokyo Shimbun:
Five U.S., European central banks to take joint steps to fight
subprime problem by providing funds

MSDF officer to be arrested today for alleged leak of Aegis ship

Social Insurance Agency finds 571 unidentified accounts whose
holders were confirmed owing to receipts despite no records

Abolish new antiterrorism bill


(1) What are you going to do about pension fiasco, Mr. Masuzoe?
(2) Ruling by Tokyo High Court in case of distributing JCP leaflets
beyond common sense

TOKYO 00005549 010 OF 011

(1) DPJ should submit own bill to counter new antiterrorism bill to
maintain civilian control
(2) Distribution of leaflets: Greater ingenuity necessary to protect
freedom of expression

(1) Federal rate cut: Uncertainty still looming over markets
(2) More practical measures needed to rectify regional tax income

(1) Make utmost efforts to trace unidentified pension accounts
(2) U.S. monetary policy still on tight rope

(1) Strange plot of change of government in Russia
(2) Politicians must make apology for pension mess

Tokyo Shimbun:
(1) Government's responsibility serious for violating pledge on
pension mess
(2) Guilty verdict in leaflets-distribution case cannot be

(1) A-bomb disease recognition study group: Why don't you listen to
cries by victims?

(10) Prime Minister's schedule, December 12

NIKKEI (Page 2) (Full)
December 13, 2007

Attended at Kantei oversea economic cooperation meeting.

Met with METI Vice Minister Kitabata, Natural Resources and Energy
Agency chief Mochizuki and METI Industrial Science and Technology
Policy and Environment Bureau chief Ishida.

Met with Cabinet Office Vice Minister Uchida and Quality-of-Life
Policy Bureau chief Nishi. Met afterwards with Science and
Technology Minister Kishida and Science, Technology Policy Council
member Masuo Aizawa, and Assistant Deputy Chief Cabinet Secretary
Saka, followed by Minister of People's Life Kishida. Met with LDP
Election Committee Chairman Koga and Vice Chairman Suga.

Met with Asian and Oceanian Affairs Bureau chief Sasae, followed by
former LDP Secretary General Nakagawa.

Met with NKK Line Honorary Chairman Jiro Nemoto, followed by Finance
Minister Nukaga, Vice Finance Minister Tsuda, Budget Bureau chief
Sugimoto, and Financial Bureau chief Katsu.

Minister in charge of Declining Birthrate Kawakami. Met later with

TOKYO 00005549 011 OF 011

Aichi Gov. Kanda.

Vice Agriculture Minister Shirasu, followed by Deputy Chief Cabinet
Secretary Futahashi.


Returned to his private residence in Nozawa.


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