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Cablegate: Daily Summary of Japanese Press 12/18/07

VZCZCXRO4196
PP RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #5598/01 3520823
ZNR UUUUU ZZH
P 180823Z DEC 07
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC PRIORITY 0401
INFO RUEKJCS/SECDEF WASHDC PRIORITY
RHEHAAA/THE WHITE HOUSE WASHINGTON DC PRIORITY
RUEAWJA/USDOJ WASHDC PRIORITY
RULSDMK/USDOT WASHDC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RUEKJCS/JOINT STAFF WASHDC//J5//
RHHMUNA/HQ USPACOM HONOLULU HI
RHHMHBA/COMPACFLT PEARL HARBOR HI
RHMFIUU/HQ PACAF HICKAM AFB HI//CC/PA//
RHMFIUU/USFJ //J5/JO21//
RUYNAAC/COMNAVFORJAPAN YOKOSUKA JA
RUAYJAA/CTF 72
RUEHNH/AMCONSUL NAHA 7431
RUEHFK/AMCONSUL FUKUOKA 5035
RUEHOK/AMCONSUL OSAKA KOBE 8700
RUEHNAG/AMCONSUL NAGOYA 3756
RUEHKSO/AMCONSUL SAPPORO 5672
RUEHBJ/AMEMBASSY BEIJING 0703
RUEHUL/AMEMBASSY SEOUL 6752
RUCNDT/USMISSION USUN NEW YORK 7474

UNCLAS SECTION 01 OF 08 TOKYO 005598

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 12/18/07


Index:

(1) Prime minister's statement accelerates mistrust: Government
frantic about expressing apology in wake of sharp drop in public
support ratings of cabinet (Tokyo Shimbun)

(2) Prime minister faces storm of criticism due to his campaign
pledge comment on pension records; Highly alarmed at plunging
cabinet support rate, Fukuda apologizes for LDP fliers causing
misunderstanding (Nikkei)

(3) CO2 reduction indexes to be set according to type of business:
Environment Ministry considering amending related law; Names of
unscrupulous companies to be revealed (Asahi)

(4) Materials manufacturers to mass-produce high-function materials
in China (Nikkei)

(5) TOP HEADLINES

(6) EDITORIALS

(7) Prime Minister's schedule, December 17 (Nikkei)

ARTICLES:

(1) Prime minister's statement accelerates mistrust: Government
frantic about expressing apology in wake of sharp drop in public
support ratings of cabinet

TOKYO SHIMBUN (Page 2) (Full)
December 18, 2007

The issue of unidentified holders of 50 million public pension
accounts caused by erroneous data input has once again hit the
administration. The major cause is that the Fukuda government has
for all practical purposes reneged on former Prime Minister Shinzo
Abe's Upper House campaign pledge to totally settle the issue. Abe
underscored his determination to identify the missing accounts to
the very last person. Public support ratings of the cabinet have
plummeted due to the attitude of the present government, which has
continued to make excuses, saying, "This is not a case of a breach
of a public pledge." Since Prime Minister Yasuo Fukuda's careless
remark could be taken as defiance, it has incurred the public's
anger.

The government and the ruling parties are frantically making
excuses, noting that though it had pledged to complete the
cross-checking of unattributed 50 million pension accounts by the
end of March, it never said that it would identify the holders of
all pension accounts.

It is true that in the part on the cross-checking procedure, the
agreement reached between the government and the ruling parties on
July 5 simply mentions that it would be implemented by the March
2008 target time.

However, the Liberal Democratic Party's (LDP) during the Upper House
election campaign actually took an approach that was largely
different from the agreement. The flyer it prepared for the election
includes the words "Identification of all pension accounts will be
completed," which can be taken as identifying holders of all of

TOKYO 00005598 002 OF 008


unidentified 50 million pension accounts that have yet to be unified
under basic pension numbers. For that reason, Chief Cabinet
Secretary's excuse that the "LDP simplified the matter for the

SIPDIS
election campaign" is seen as unacceptable. The government cannot
avoid being labeled as having broken its commitment.

It also has been extremely difficult to identify holders of about
9.45 million pension holders among the 50 million accounts. "Paying
benefits to the last holder," the major premise of the agreement
between the government and the ruling camp, is beginning to fall
apart. The government came under fire as having violated its
commitment in this regard, too, which consequently compounded
mistrust in politics.

In addition, as if further confirmation is needed, the prime
minister made that statement, making the public mistrust complete.
Commenting on the election pledge, the prime minister noted, "In the
sense that the election pledge has caused misunderstanding, I feel
the person who explained the matter is also responsible." The
statement indicates his real feeling that why he should be forced to
take the previous Age administration's responsibility.

However, given the sharp slip in support ratings of his cabinet, the
prime minister yesterday offered an apology: "It is true that there
were words that could cause misunderstanding (in the election
pledge). I must apologize for that."

Machimura during a press conference also acknowledged a lack of
explanations regarding the LDP's election pledge. He noted in a
serious manner, "We must humbly listen to the voices of the public
and respond to them properly."

However, the domino effect of mistrust in politics is once again
beginning to undermine the administration.

(2) Prime minister faces storm of criticism due to his campaign
pledge comment on pension records; Highly alarmed at plunging
cabinet support rate, Fukuda apologizes for LDP fliers causing
misunderstanding

NIKKEI (Page 3) (Abridged slightly)
December 18, 2007

The Fukuda administration now finds itself facing a growing storm of
criticism over its response to the issue of some 50 million
unidentified public pension accounts that have yet to be integrated
into basic policy numbers. During the July House of Councillors
election campaign, the Liberal Democratic Party disseminated fliers
saying that the government would complete integrating the 50 million
accounts into basic policy numbers. Prime Minister Yasuo Fukuda
apologized for the fliers "causing misunderstanding." To defuse
criticism, the government intends to steadily implement its policy,
announced on July 5. The government's response is drawing fire even
from within the ruling parties.

"I think it's because of the pension problem and the like. The
government must take solid steps, while humbly lending an ear to the
voices of the people." Chief Cabinet Secretary Nobutaka Machimura in
a press conference yesterday admitted that the cabinet's plummeting
support rate, as seen in Nikkei's latest opinion poll that showed a
12-point plunge to 43 PERCENT from the previous poll, was partly
attributable to the government's inadequate response to the pension

TOKYO 00005598 003 OF 008


issue.

Machimura also apologized, saying, "If the government's explanation
misled people, we must apologize for the insufficient explanation."
Prime Minister Fukuda, too, said to the press corps: "It was a fact
that the LDP fliers contained a misleading expression, and I must
apologize for it."

The apology was simply for causing "misunderstanding" over the
government's response to the pension issue. (Machimura and Fukuda)
did not acknowledge that the government broke its public pledge.
Machimura explicitly said: "Work has been proceeding (in line with
the government policy, released on July 5). Nothing has been done
out of the line of it." Machimura thus pointed to the government's
posture of implementing its July policy, defining it as a de facto
"public pledge."

The government's July policy says that it will complete
cross-checking the 50 million pension records by the end of March
2008. It does not say, however, that the government will identify
the holders of all the 50 million accounts. If that is also the
Fukuda administration's public pledge, even if holders of some
accounts are not identified through cross-checking, that would not
constitute breaking the public pledge.

But during the Upper House election campaign, then Prime Minister
Shinzo Abe promised that the government would pay out pension
benefits to the last person, going a step further than the
government policy. About Abe's promise, Machimura explained: "The 50
million accounts include those to whom the government was aware in
the first place that it cannot (pay benefits)." It is a fact,
however, that there is a gap in views with the public. To what
extent the government can obtain public understanding remains is
unknown.

Even ruling party members are criticizing Prime Minister Fukuda who
said about the slow-moving identification work, "Is it so serious as
to be called breaking a promise to the public," and Machimura.

LDP Secretary General Bunmei Ibuki in yesterday's executive meeting
with the government said in a firm tone: "The pension issue is a
matter of great concern to the public, and we must deal with it
sincerely and carefully." New Komeito Diet Affairs Committee
Chairman Yoshio Urushibara also complained to the press, saying:
"Comments by the prime minister and other cabinet ministers seem to
be out of line with the people's perspective."

Checking pension records each holder's responsibility

The Social Insurance Agency (SIA) began yesterday mailing documents
on pension records to those who are believed to be the holders of
unidentified pension accounts. The documents are designed to notify
the policy holders of the existence of un-integrated pension
records. Each holder is responsible to check the records to find if
there are any flaws in them. In other words, resolving the problem
of unidentified pension accounts is based on the responsibility of
each policy holder. There is a long way go before restoring public
trust in the national pension program.

The SIA plans to send by the end of March 2008 documents on pension
records to a total of 10 million people who are believed to be the
holders of unidentified pension accounts.

TOKYO 00005598 004 OF 008

Those pensioners who received the documents and found that their
pension benefits might increase must report to their respective SIA
offices to verity their records. Those who are not receiving
benefits must mark down any mistakes on the records and send them
back to the SIA.

All policy holders and pensioners other than the holders of
unidentified accounts will receive records from the SIA by October
next year.

Whether this approach can completely settle the pension record
problem remains to be seen.

Of the 50 million accounts, the SIA has yet to identify the holders
of 20 million accounts. The country's pension system has many
problems such as unpaid pension premiums. Revamping the national
pension system is expected to remain as a major political challenge
in the years to come.

(3) CO2 reduction indexes to be set according to type of business:
Environment Ministry considering amending related law; Names of
unscrupulous companies to be revealed

ASAHI (Top Play) (Full)
December 18, 2007

The Environment Ministry is now considering amending the Law
Concerning the Promotion of Measures to Cope with Global Warming as
a drastic measure to cut greenhouse gas emissions, such as carbon
dioxide (CO2). The details of the draft bill were revealed
yesterday. The draft notes that entities subject to the reporting of
the amount of emissions would be increased and guidelines for
reductions in emissions would be set, according to the type of
business. The names of companies whose efforts are markedly poor
would be revealed. The ministry will aim at presenting the bill to
the regular Diet session next year. However, since the proposals
would lead to strengthening regulations on corporate activities,
business circles and the Ministry of Economy, Trade and Industry
(METI) are expected to oppose the proposal. Coordination of views
could bog down.

Japan's emissions of greenhouse gasses in fiscal 2006 increased 6.4
PERCENT from the level of the base year of fiscal 1990, according
to preliminary figures. As such, Japan finds it difficult to meet
the target of cutting emissions of such gases by 6 PERCENT ,
compared with the 1990 level (average figure to be achieved between
2008 and 2012) as mandated under the Kyoto Protocol. The amendment
aims at strengthening measures targeting the services sector, such
as offices, whose emissions of greenhouse gasses have shown a
pronounced increase of 41.7 PERCENT , compared with the 1990 level.

The present law obligates each business establishment, such as a
factory whose size exceeds a certain set scale, to report the amount
of its emissions. Under the draft, one entire company and franchises
instead would be required to report such an amount. If the size of
one entire company exceeds a certain set size, it would be able to
report the amount of emissions covering all of its small-scale
factories and branch offices or outlets in the case of convenience
store chains. The Environment Ministry estimates that entities
subject to the new regulation in the services sector would increase
about 10 PERCENT to about 50 PERCENT from the present number.

TOKYO 00005598 005 OF 008

According to the guidelines, the environment minister would set
indexes and measures, such as the amount of emissions allowed in
certain set economic activities, to be observed by each industry
sector. Businesses whose emissions of greenhouse gasses tend to
increase at a pace higher than a set level would be obligated to
observe the index. Those that responded to the order extremely
insufficiently would be advised to constrain emissions. If they fail
to follow the recommendation, their names would be revealed.
Business circles will likely express concern that such measures
would lead to setting an emissions framework for each company. The
ministry would also consider mandating equipping government offices
and condominiums to be newly built, if their size exceeds a certain
set scale, with power generation facilities using recyclable energy,
such as solar light.

A mechanism of acknowledging not only emission quotas (credit)
obtained by implementing measures to cut greenhouse gas emissions
overseas but also implementation of reductions in emissions by
domestic small- and medium-size businesses as reductions attained
would also be established.

The guidelines would also set the responsibility of the people and
employers in concrete terms. The people would be urged to choose
goods that emit less greenhouse gasses. Employers would be asked to
provide appropriate information, such as explanations on their
products.

(4) Materials manufacturers to mass-produce high-function materials
in China

NIKKEI (Top Play) (Full)
December 17, 2007

Basic materials manufacturers have decided to produce high-function
materials in China. Mitsui Chemical Inc. and Mitsubishi Gas Chemical
Co. will build plants in China for high-function resins used in
automobiles and electronic appliances sometime between 2010 and
2012. Asahi Glass Co. has already started mass-producing
energy-saving glass. Materials that are superior in terms of
strength and other performance are in high demand in the Chinese
market for basic materials - the second largest after the United
States'. Such companies have so far imported commodity-grade
products from Japan. With Japanese companies' decision to start
local production, their strategy toward China will enter a new
phase.

China's demand for petrochemicals accounts for 16 PERCENT of global
demand, second after the US. In 2006, Japanese chemical
manufacturers shipped 16 PERCENT of their domestic products to
China, but much of them were commodity-grade products, such as
polyethylene. The companies now aim to advance into the Chinese
market with value-added and profitable high-functional products.

Mitsubishi Gas Chemical plans to construct a polycarbonate (PC)
plant in Shanghai in 2010 at a cost of 30 million yen. The plant
will initially output 80,000 tons a year and supply products to
local auto and electronic appliance plants. The company intends to
increase the production volume to 200,000 tones in the future.
Excellent in thermal resistance and transparency, PCs are used in
such products as automotive lights, DVD substrates, and the bodies
of electronic devices. The company, the world's third largest PC

TOKYO 00005598 006 OF 008


producer, aims to use its first plant in China to raise its market
share.

Mitsui Chemicals has decided to construct a plant for phenols - a
basic material for PCs - in Shanghai, investing more than 30 billion
yen. The plant will be on line in 2012 and will have an annual
output capacity of 300,000 tons. The company has already plants for
PC materials in Japan and Singapore, enjoying the second largest
share in the global market.

In China, the market for consumer goods with high quality and
performance is expanding, reflecting an increase in the number of
high income-earners. Accordingly, since demand for high-functional
resins is also sharply increasing, the Chinese market is becoming
more attractive for Japanese chemical manufacturers.

On the strength of their technological prowess, Japanese companies
have decided to build plants for high-function products in China,
based on the anticipation that these investments will have few risks
because of minimal competition with Chinese firms and expected
steady demand.

In other industries than chemicals, Asahi Glass Co. has started
producing energy-saving glass at its plant in Dalian. By coating a
specific metal film on glass, insulation effect will be increased,
resulting in bringing down households' air conditioning and heating
expenses. Its price is about three times higher than commodity-grade
products, but given the expanding wealthy class and growing
awareness among the public of the need to protect the environment,
demand for the product is likely to boost. Among the leading
Japanese glassmakers, Asahi Glass is the first company that has
started production in China.

Oji Paper Co. also plans to output high-class printing paper in
Nantong in 2010 as the first paper manufacturer to invest in China.

In China, demand for basic materials for automobiles and electronic
appliances has skyrocketed over the past several years. Japanese
materials manufacturers aim to tap the Chinese market for
high-function materials ahead of American and European companies as
part of efforts to strengthening their international
competitiveness.

(5) TOP HEADLINES

Asahi:
Environment Ministry drafts industry-specific yardsticks for curbing
CO2 emissions

Mainichi:
Support rate for Fukuda Cabinet drops 13 points to 33 PERCENT

Yomiuri:
Former Vice-Defense Minister Moriya to be rearrested today

Nikkei:
METI eyes beefing up support for small businesses via credit
guarantee association

Sankei:
Work in final stage to determine whether to approve school textbook
publishers' requests for correcting references to Okinawa mass

TOKYO 00005598 007 OF 008


suicide

Tokyo Shimbun:
Record 6,130 residents file Atsugi base noise pollution lawsuit
seeking 4.6 billon yen in compensation

Akahata:
JCP seeks revision of Worker Dispatch Law aimed at equal treatment
to workers

(6) EDITORIALS

Asahi:
(1) Fukuda administration: Honeymoon-like period is over
(2) Correction of tax revenues: Ruling party proposal is missing the
point

Mainichi:
(1) Sharp plunge in public support rating for Fukuda administration
could indicate change in trend
(2) Documents on pension records sent: Social Insurance Agency
should not jump to a conclusion that this will settle the issue

Yomiuri:
(1) Sympathy budget: Confidence in Japan-US alliance has been
maintained
(2) Recycling home electronics: Remove malicious business to improve
recovery rate appliances:

Nikkei:
(1) Confiscation of fiscal resources will undermine autonomy of
health insurance association
(2) Authorized possession of guns must not be left uncontrolled

Sankei:
(1) Prime minister's remarks: Consider again that they carry a
special weight
(2) Court decision on Mitsubishi Motors: Company should improve its
proclivity of hiding inconvenient facts

Tokyo Shimbun:
(1) Documents on public pension records sent: We should make sure we
notify if errors are found
(2) Lawsuit on death by overwork: We call for revision of labor
control

Akahata:
(1) Padded bills for weapons: Defense Ministry should correct its
stance of giving in to military industry

(7) Prime Minister's schedule, December 17

NIKKEI (Page 2) (Full)
December 18, 2007

08:22
Met at the Kantei with Environment Minister Kamoshita and Vice
Environment Minister Tamura.

08:41
Attended a meeting of cabinet ministers responsible for a
livelihood-protection project. Then, attended a meeting on reforming

TOKYO 00005598 008 OF 008


the Defense Ministry. Later, met State Minister for People's Life
Kishida, with Vice Minister Uchida of the Cabinet Office.

09:54
Met Economic and Fiscal Policy Minister Ota and others.

11:00
Gives awards to the gold medalists in the Skill Olympics
International Convention.

12:16
Arrived at his official residence.

12:58
Attended a funeral service for former Management and Coordination
Agency Director General Takami Eto at the Aoyama Funeral Hall.

14:55
Met at the Kantei with Finance Minister Nukaga, Vice Finance
Minister Tsuda, and others. Followed by Internal Affairs Minister
Masuda and Decentralization Promotion Committee Chairman Uichiro
Niwa.

16:06
Met National Police Agency Director General Yoshimura. Followed by
Vice Foreign Minister Yachi.

17:01
Attended a party executive meeting in the Diet building.

17:23
Met Administrative Reform Minister Watanabe and Chief Cabinet
Secretary Machimura at the Kantei.

SIPDIS

18:04
Met Abu Dhabi Crown Prince Mohammed, with Nukaga and Economy, Trade
and Industry Minister Amari. Then attended a ceremony to sign a
joint statement. Later, hosted a dinner party for the crown prince.

21:25
Returned to his private residence in Nozawa.

SCHIEFFER

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