Cablegate: Japanese Morning Press Highlights 12/27/07

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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 12/27/07

Index:

1) Top headlines
2) Editorials
3) Prime Minister's daily schedule (Nikkei)

Fukuda diplomacy:
4) Prime Minister Fukuda in first official visit to China to meet
President Hu, seek progress in his "strategic mutually beneficial"
diplomacy (Yomiuri)
5) Prime Minister Fukuda to focus on environmental cooperation in
visit to China (Mainichi)
6) China prior to Fukuda visit floats idea of joint gas-field
development in E. China Sea based on median-line concept (Asahi)
7) Prime Minister Fukuda, now forward looking about setting targets
for reduction of greenhouse gas emissions, will promote the concept
at G8 Summit (Nikkei)

8) Japan seeks to strengthen ties with countries around the Mekong
area, starting with five-country foreign ministers' conference next
month (Mainichi)

9) Yabunaka to replace Yachi as vice foreign minister (Mainichi)

Defense and security issues:
10) Defense Ministry finds 105 cases of MSDF ship logs having been
discarded due to sloppy record management practices (Yomiuri)
11) North Korea has produced 30 kilograms of plutonium: sources
(Tokyo Shimbun)

12) Iwakuni mayor, who resigned to protest U.S. jet relocation to
local base, will run again to seek popular mandate (Yomiuri)

Economic woes:
13) Japan's GDP in 2006 drops to less than a 10 PERCENT share of
world GDP (Nikkei)
14) Questionnaire of presidents of 100 leading companies finds 15
PERCENT drop in those who see continued economic expansion
(Nikkei)

Democratic Party of Japan (DPJ) in action:
15) DPJ's plan to make the Upper House a major contributor of
legislation fizzles when only one of the party's bills passes
(Mainichi)
16) DPJ bill that would create a space agency has met with
objections, including charge that it goes against administrative
reform line (Yomiuri)

Articles:

1) TOP HEADLINES

Asahi, Mainichi, & Yomiuri:
Education panel approves textbook reference to military's role in
Okinawa mass suicides

Nikkei:
Japan's share of global GDP under 10 PERCENT due to delay in reform
and weak yen

Sankei:
Social Insurance Agency illegally reduced 1.1 billion yen in

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delinquent charges of employee pension and health insurance
premiums

Tokyo Shimbun:
North Korea: The country has 30kg plutonium

Akahata:
Education panel does not approve textbook reference to military's
direct order to Okinawa residents to commit suicide en masse

2) EDITORIALS

Asahi:
(1) Textbook reference to mass suicide in Okinawa: We must put the
lessons to good use
(2) Prime Minister Fukuda should talks about history for the future
with Chinese leaders

Mainichi:
(1) Textbook reference to mass suicide in Okinawa: Questions still
remain in exclusion of wording "coercion by the military"
(2) DPJ's tax system outline: Productive debate at Diet should be
conducted

Yomiuri:
(1) DPJ's outline on tax system: From where will financial resources
for large-scale tax cut come?
(2) History textbook on Okinawa: Don't allow politicization of
textbook screening

Nikkei:
(1) Regulatory reform needs political support
(2) Thailand needs political stability after general elections

Sankei:
(1) Mass suicide during Battle of Okinawa: "Twofold screening
decisions" create problems for the future
(2) New NHK chairman urged to promote reforms for viewers

Tokyo Shimbun:
(1) Textbook reference to mass suicide in Okinawa: Can the public
understand history without reference "coercion by the military"?
(2) New NHK chairman should keep in mind mission of public
broadcasting

Akahata:
(1) History textbook on Battle of Okinawa: Okinawa's feelings
trampled down

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, December 26

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

09:41
Met Vice Transport Minister Minehisa at the Kantei. Followed by
Defense Minister Ishiba. Later, met Japan International Cooperation
Agency President Sadako Ogata. Then met Hiroshi Yonekura, chairman
of the Japan-Hungary Cooperation Forum.

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11:00
Met Urawa Reds player Keita Suzuki, with former Prime Minister Mori.
Mori stayed behind. Joined by Chief Cabinet Secretary Machimura.
Followed by Nippon Keidanren Honorable Chairman Okuda.

12:27
Attended a meeting of the Nippon Keidanren Committee at the
Keidanren Hall in Otemachi.

13:24
Handed a recommendation letter to the LDP-endorsed candidate for the
Kyoto mayoral election at party headquarters. Posed for video
recording for the party's website.

15:28
Met at the Kantei with Defense Policy Bureau Director General
Kanazawa, Defense Intelligence Headquarters Chief Mukunoki, and
Cabinet Intelligence Director Miki. Miki stayed behind. Later, met
Foreign Ministry Public Diplomacy Department Head Yamamoto. Followed
by Council on Regulatory Reform Chairman Kusakari and others.

17:06
Met Cabinet Office Special Advisor Kurokawa. Attended a meeting of
the Council on Economic and Fiscal Policy. Later met Environment
Minister Kamoshita and Vice Environment Minister Tamura.

18:32
Met Upper House Chairman Otsuji. Followed by Social Insurance Agency
Director General Banno and Assistant Deputy Chief Cabinet Secretary
Saka. Saka stayed behind.

20:18
Returned to his private residence in Nozawa.

4) Prime minister to leave for China today

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

Prime Minister Fukuda will leave Japan today for a four-day visit to
China to meet President Hu Jintao, Premier Wen Jiabao, and other
senior Chinese government officers. In the meetings, both sides are
expected to agree on measures to promote cooperation in the
environment and energy-conservation area, specifically, those to
establish a Japan-China environment information plaza and
energy-saving and environment counseling centers in China, as well
as exchanging a total of 10,000 trainees in this area, according to
government sources.

In China, air and water contamination is becoming serious as its
economy grows rapidly. To deal with these problems, Japan has
decided to set up an environment information plaza in Beijing and
energy-saving and environment counseling centers in 10 cities in
China as facilities for Japan to provide China with information
based on its experience of success and failure in the process of its
economic growth in the postwar period.

Chinese people will have free access to the plaza and centers. Japan
plans to use these facilities as places to show and have Chinese
learn Japan's pollution problems and ways to contain them, as well
as its state-of-the-art energy-conservation technology.

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Meanwhile, Prime Minister Fukuda intends to stress in the summit
slated for the 28th the need for Japan and China to become creative
partners in order to "build the future of Asia and the world."

5) Japan to further promote "mutually beneficial relationship based
on common strategic interests" with Prime Minister Fukuda set to
travel to China today and hold first meeting with President Hu

MAINICHI (Page 2) (Full)
December 27, 2007

Takuji Nakata

Prime Minister Yasuo Fukuda will make his first trip to China today
after assuming the post. Tomorrow, Fukuda is to meet separately with
President Hu Jintao, Premier Wen Jiabao, and the National People's
Congress' Standing Committee Chairman Wu Bangguo. In his first
meeting with Hu, Fukuda is expected to confirm Japan and China will
further promote "a mutually beneficial relationship based on common
strategic interests," and both leaders are expected to reach
agreement on a plan for Hu to visit Japan in next April. Fukuda is
to return home on Dec. 20.

In a session with Premier Wen, Fukuda and Wen will sign an agreement
that mentions cooperation in the environmental area and expansion of
exchanges of youths, and the two will hold a joint press conference,
an unusual event for the leaders of Japan and China. Regarding the
pending issue of jointly developing gas fields in the East China
Sea, no major progress is expected as both sides have yet to bridge
the gaps in specific measures for the joint development.

China has prepared a red-carpet treatment toward Fukuda, a pro-China
prime minister, by arranging for example a dinner party to be joined
by top leaders - an event not held since Prime Minister Yasuhiro
Nakasone visited China in the early 1980s.

Fukuda is to deliver a speech at Beijing University tomorrow. On
Dec. 29, Fukuda will visit Tianjin's Binhai Zone, a priority area
for economic development for the Chinese government. On Dec. 30,
Fukuda will visit the Temple of Confucius at Qufu, Shandong
Province. Fukuda wants to demonstrate "closeness" with China not
only at the government level but also in personal relations with the
Chinese people.

6) China asks Japan to jointly develop gas fields in sea areas
around median line

ASAHI (Page 1) (Full)
December 27, 2007

Kenji Minemura, Beijing, Kazuto Tsukamoto

China has asked Japan to jointly develop new gas fields in the sea
areas extending into the Japan-China median line, which Beijing
until recently did not accept, sources connected with the Japanese
and Chinese governments revealed. Final coordination is underway.
The two countries aim to reach a basic agreement on joint
development at the upcoming Japan-China summit between Prime
Minister Fukuda, President Hu Jintao, and Premier Wen Jiabao planned
during Fukuda's China visit that will start today. Both sides want
to have tangible results before Hu's visit to Japan planned for next
spring.

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According to a source connected with the two governments, it was
last week when China conveyed its willingness to jointly develop new
gas fields to Japan. Vice Foreign Minister Wang Yi secretly visited
Japan and met with Administrative Vice Foreign Minister Shotaro
Yachi. He told him about China's new proposal and the two discussed
it.

Gas fields confirmed so far near the median line include Chunxiao
(Shirakaba in Japanese), Duanqiao (Kusunoki in Japanese) and
Tianqaitian (Kashi in Japanese). Japan and China have yet to bridge
the gaps over how to handle the Chunxiao gas field China is
independently developing. Whether both sides can reach a basic
agreement on the joint development at the Japan-China summit set for
tomorrow is still fluid.

In the past discussions, the Chinese side did not accept the median
line itself and instead insisted that Okinawa Trough located at the
end of the continental shelf stretching from the Continent is the
border between China and Japan. China has asserted that its
independent development of gas fields near the median line is
justifiable. In the past 11 rounds of bureau-director-level talks
between the two countries, "discussions in themselves have been
stalled," the informed source said.

7) Prime Minister Fukuda forward-looking about setting numerical
target for reduction of greenhouse gases, and will week a change in
course at the G8 Summit (Nikkei)

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

Prime Minister Yasuo Fukuda meeting with the press corps yesterday
took a forward looking stance on setting a new numerical target when
creating a new international framework for the reduction of
greenhouse gases in the post Kyoto-Protocol period. He said: "The
question is what kind of target advanced countries will have. I
think some kind of target is necessary."

At the COP13 United Nations Climate Change Meeting this month, Japan
was opposed to setting a numerical target, stating, "We should give
priority to having the United States and other countries join the
framework." In the prime minister's statement yesterday seems to be
opening for changing course, looking toward the Lake Toya G8 Summit
next July, which will have global warming as a main theme.

Regarding the trading of emissions rights, the prime minister
stated: "I hear that such are being seen differently by every
country, and (emissions rights trading) has become a kind of money
game." He indicated that a set of standards needed to be created.

8) Government to strengthen ties with five countries around the
Mekong

MAINICHI (Page 5) (Full)
December 27, 2008

The government has decided to hold a foreign ministerial meeting for
the first time with five countries surrounding the Mekong area in
order to discuss economic cooperation and development. It plans to
hold the meeting in Tokyo on Jan. 16. Foreign Minister Masahiko
Koumura is also expected to hold sessions with individual ministers.

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The Japanese and Laotian foreign ministers will sign an investment
agreement. The planned foreign ministerial is also aimed to support
economic integration of the Association of Southeast Asian Nations
(ASEAN) by narrowing regional gaps through the promotion of direct
investment.

9) Yabunaka to be installed as vice foreign minister with Yachi
firmly declining to stay on

MAINICHI (Page 2) (Full)
December 27, 2007

The government yesterday decided to approve of the retirement of
incumbent Administrative Vice Foreign Minister Shotaro Yachi (63),
who is to mark his third year on Jan. 4 of next year since assuming
the post. It will appoint Deputy Foreign Minister Mitoji Yabunaka
(59) as his replacement. Kenichiro Sasae, director-general of the
Asian and Oceanian Affairs Bureau, is expected to be installed as
Yabunaka's successor, and Minister Akitaka Saiki at the Japanese
Embassy in the United States will fill Sasae's shoes. This lineup
will be approved at a cabinet meeting possibly in mid-January after
the current extraordinary session of the Diet closes. Yachi joined
the Ministry of Foreign Affairs (MOFA) in 1969. After serving as
director-general of the Foreign Policy Bureau and then deputy chief
cabinet secretary at the Cabinet Secretariat, he assumed the post of
administrative vice foreign minister. Yachi is known as a hard-liner
against North Korea and played a leading part in implementing such
policy lines as "value-based diplomacy" advocated by then Prime
Minister Shinzo Abe and the "arc of freedom and prosperity" promoted
by then Foreign Minister Taro Aso.

Some in the government insisted that Yachi should stay on until the
Group of Eight summit meeting at Lake Toya, Hokkaido, next July, but
Yachi firmly declined to stay on, citing the case of Takemasa
Moriya, who was criticized for his long service of four years as
administrative vice defense minister. After retirement, Yachi will
join Waseda University's Institute of Japan-US studies.

Yabunaka joined MOFA in 1969 and passed the senior-post examination.
He served in such posts as director of the Second North American
Division and director of the General Affairs Division of the
Minister's Secretariat. In December 2002, when Prime Minister Yasuo
Fukuda served as chief cabinet secretary, Yabunaka assumed the post
of director-general of the Asian and Oceanian Affairs Bureau. In
Japan-North Korea working-level talks in November 2004, Yabunaka led
the Japanese delegation and took home the remains that the North
Korean side said were those of abductee Megumi Yokota.

10) MSDF mistakenly discarded 105 logbooks

YOMIURI (Page 4) (Full)
December 27, 2007

The Maritime Self-Defense Force mistakenly discarded logbooks from
the Towada, a supply ship, within their retention period. In
response to this issue, the Defense Ministry looked into its
archives and announced findings from its in-house investigation
yesterday. As a result, the Defense Ministry discovered that it may
have mistakenly discarded 105 logbooks, including the already
revealed disposal of three logbooks. This shows the Defense
Ministry's poor management of documents. The Defense Ministry will
punish those involved early next year.

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The Defense Ministry checked its filed archives of about 2,300,000
official documents. As a result, the ministry found that its
officials had mistakenly discarded a total of 9 document files,
including MSDF logbooks and duty records. The ministry could not
discover a total of 96 archives, including document files and
logbooks, and it deems that those archives could have been
mistakenly discarded.

According to the MSDF's regulations, MSDF ships must keep their
logbooks for one year. After that one-year period, MSDF district
headquarters are to keep them for three years. There are now 261
MSDF vessels in commission, including 255 ships that have been in
commission for over one year. However, all of those 255 MSDF ships
kept their logbooks against the regulations.

The Defense Ministry plans to create a document filing manual for
its archives. In addition, the ministry will also set up a
third-party checking system and simplify its document management
regulations.

11) Plutonium output at 30kg: N. Korea

TOKYO SHIMBUN (Top play) (Abridged)
December 27, 2007

BEIJING-North Korea's Vice Foreign Minister Kim Gye Gwan, chief
delegate to the six-party talks over North Korea's nuclear issues,
met with U.S. Assistant Secretary of State Hill, chief U.S.
negotiator, when Hill visited North Korea early this month. In that
meeting, Kim told Hill that North Korea's output of plutonium, from
which nuclear weapons can be made, was about 30 kilograms. This fact
was revealed yesterday by several sources familiar with U.S.-North
Korea relations. Kim seems to have specified that North Korea
produced plutonium for multiple purposes, including the making of
nuclear weapons.

North Korea agreed at the six-party talks to declare its nuclear
programs, and this is the first time that North Korea's declaration
has been revealed in concrete terms. However, North Korea's
declaration was different from a U.S. estimate, according to the
sources. North Korea is suspected of having enriched uranium. The
six-party talks reached a deal, in which North Korea agreed to
(disable its nuclear facilities and) declare all its nuclear
programs. However, the talks will likely face rough going.

Hill visited North Korea on a Dec. 3-5 schedule. During his stay in
North Korea, Hill met with Kim and other North Korean officials,
including Foreign Minister Pak Ui Chun. According to the sources,
the North Koreans revealed that North Korea's output of plutonium
was about 30 kilograms. In addition, they are also said to have
specified how much plutonium they used for their underground nuclear
test in October last year and that they used it to make nuclear
weapons.

According to the sources, the United States estimates North Korea's
total output of plutonium to be over 50 kilograms. It seems that the
North Korean declaration was way below the U.S. estimate.

12) Iwakuni mayor tenders resignation, expressing willingness to run
in mayoral election possibly early next year

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YOMIURI (Page 2) (Excerpts)
December 27, 2007

Iwakuni Mayor Katsusuke Ihara, an opponent of the government's plan
to relocate U.S. jet fighters to Iwakuni Air Base in the city,
Yamaguchi Prefecture, tendered his resignation (dated Dec. 28)
following a clash with the city assembly over the central
government's move to cut 3.5 billion yen in subsidies to the city
(linked to relocation of U.S. jets from Atsugi to Iwakuni base). The
city assembly accepted the resignation. In a press conference last
night, Ihara expressed his willingness to run in the mayoral
election that is expected to take place early next year, saying: "I
would like to seek the people's judgment."

Based on the Public Election Law, the city is expected to hold a
mayoral election in late January or in early February to seek the
people's opinion on the propriety of the relocation plan. Those in
favor of the plan are accelerating the candidate-selection process.

13) Japan's share in world nominal GDP falls below 10 PERCENT in
2006: Delay in reforms, cheap yen blamed for poor showing

NIKKEI (Top Play) (Excerpts)
December 27, 2007

The Nikkei has learned that Japan's global share of nominal GDP in
2006 stood at 9.1 PERCENT , falling below the 20 PERCENT level for
the first time in 24 years. Its share has dropped 50 PERCENT ,
compared with the peak year of 1994. Japan also slipped down in
terms of per-capita nominal GDP. Behind the drop is the sluggish
nominal growth of the economy stemming from the delay in the effort
to emerge from deflation. Since newly emerging countries that are
achieving high growth like China are mounting a charge, the Japanese
economy is bound to further lose its global presence, if reform
efforts continue to bog down.

The Cabinet Office revealed the statistics in the national economic
accounting released yesterday. Japan's nominal GDP in 2006 was
4.3755 trillion dollars, down 4 PERCENT from the preceding year,
marking a second consecutive year of decline.

Nominal GDP increased 1.4 PERCENT from the previous year in yen
terms. However, it dropped in dollar terms. The major reason for
that is the yen kept weakening on global exchange markets. The
average exchange rate of the yen in 2006 was 116 yen against the
dollar, marking the lowest level since 2002.

The Cabinet Office explained that another factor is the sluggish
nominal growth. The real growth rate in 2006 marked a comparatively
high growth of 2.4 PERCENT . However, with nominal growth rates
continuing to top real growth rates on a yearly basis since 1999,
Japan's nominal GDP made a poor showing in international
comparison.

14) Questionnaire of 100 heads of companies: Respondents who
replied, "The economy is expanding" dropped to 64 PERCENT ; 60
PERCENT confident of their companies' performance; Concerned about
US economy, drop in housing starts

NIKKEI (Page 1 (Excerpts)
December 2, 2007

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In a questionnaire of 100 corporate chief executives tallied by the
Nikkei yesterday, 64 PERCENT of respondents replied, "The economy
is expanding," marking a 15-point fall from the previous survey. A
cautious view is widespread due to such issues as non-performing
Subprime loans for individuals with low creditworthiness, high
resources prices and a drop in housing starts. However, as far as
their companies' performance in fiscal 2008 is concerned, 60 PERCENT
projected a better showing than the estimated performance in fiscal
2007. Corporate operators remain confident.

The questionnaire was carried out from early December through
mid-December, targeting presidents (including chairmen) of leading
companies. Replies were sent by 134 companies.

15) DPJ strategy of having bills adopted by Upper House first fails

MAINICHI (Page 5) (Excerpts)
December 27, 2007

The strategy of the opposition Democratic Party of Japan (DPJ or
Minshuto) of having bills first adopted by the House of Councillors
before they are deliberated in the House of Representatives has
fizzled. Although the DPJ, which holds a majority in the Upper
House, has submitted 13 bills to the upper chamber as of Dec. 26,
only one bill designed to support the livelihoods of disaster
victims has been enacted. It does not appear likely that bills on
pensions and agriculture policy that the DPJ had incorporated into
its manifesto (campaign pledges) for the Upper House election will
obtain Diet approval in the current session that ends on Jan. 15.

The DPJ has assumed a strategy of adopting the pension and
agriculture bills first in the Upper House before sending them to
the Lower House. It predicted that it would be difficult for the
ruling parties to reject and scrap them since public opinion was
reflected in them.

However, as soon as the DPJ's bill to ban the use of pension
premiums for other purposes was sent to the Lower House, the ruling
coalition submitted its own bill to use pension premiums only for
the construction of facilities, aiming at killing both bills at the
same time. The two bills have been left unattended after the Lower
House deliberated on them three times or nine hours in November.

The DPJ's bill designed to compensate to individual farmers the
differences in prices between sales prices and production costs
regardless of the scale of farmers was approved by the Upper House
on Nov. 9. The ruling camp finally began deliberations on the bill
on Dec. 5, but only seven hours were spent for deliberations by Dec.
12. Meantime, the government and ruling coalition have incorporated
subsidies also to small-sized farmers in the state budget for fiscal
2008, aiming at including the DPJ's idea in the budget. The
subsidies had been provided to farmers whose farms fall under a
certain size level.

16) DPJ space bill calls for creating "space agency," causing
backlash as going against administrative reform policy

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

The science and technology policy working team of the Democratic

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Party of Japan (DPJ), chaired by House of Representatives member
Yoshihiko Noda, presented in a joint meeting of the Cabinet Office
and the Education and Science Ministry yesterday the outline of a
bill on space it plans to submit in the next ordinary Diet session.
In the bill, the largest opposition party approves the use of space
for defense purposes in line with a bill jointly submitted by the
Liberal Democratic Party and the New Komeito to the Diet in June.

The DPJ bill specifies that space should be used based on the
nation's pacifist Constitution, which advocates a defense-only
policy, and the Space Treaty, which stipulates that weapons of mass
destruction should not be deployed in space. The ruling parties'
bill also makes it clear that space should be used in line with
treaties and other international agreements on space development as
well as based on the nation's pacifist Constitution. The government
previously took the interpretation that the use of space by Japan
should be restricted only to peaceful purposes. The DPJ bill
includes many other similar parts to those of the ruling camp's
bill, such as the advocate of industrial promotion and the formation
of a space-use plan.

A major different part between the two bills is on a system to
promote space development. The DPJ bill proposes establishing a
"space agency" by merging a number of relevant organizations, such
as the Education and Science Ministry, the Ministry of Economy,
Trade and Industry, and the Japan Aerospace Exploration Agency. But
the bill of the ruling camp does not step into organizational
reform, just calling for establishing a strategic space development
taskforce under the prime minister.

A DPJ lawmaker who was involved in drafting the bill said: "It will
be difficult to adjust interests under a strategic taskforce
composed of representatives from relevant government agencies." In
the joint meeting yesterday, however, some voiced opposition to the
proposed creation of a space agency, one member remarking: "A
measure to make members of independent administrative corporations
national public servants goes against the administrative reform
line."

DONOVAN

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