Cablegate: Japanese Morning Press Highlights 02/29/08

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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.

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TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA

SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 02/29/08

Index:

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

Defense issues:
4) Iwakuni mayor's formal acceptance of U.S. jet relocation from
Atsugi is a great step forward for USFJ realignment (Yomiuri)
5) MSDF seaman has been missing ever since questioned about Aegis
information leakage by investigators (Sankei)

Aegis collision incident:
6) It was Defense Minister Ishiba's wish to question the Aegis
captain in his office soon after the collision with a fishing boat
(Mainichi)
7) Defense Minister Ishiba's concurrence not obtained by MSDF brass
to question Aegis captain about the collision with a fishing boat
(Sankei)
8) Ishiba repeatedly stresses that if there is evidence of a
cover-up after the Aegis accident, he will resign as defense
minister (Nikkei)
9) Ishiba tours site of the Aegis destroyer Atago's collision with a
fishing boat (Mainichi)
10) The opposition camp continues to loudly clamor for Ishiba's
resignation (Tokyo Shimbun)

China connection:
11) Huge gap between China and Japan in explaining the likely cause
of the recent imports of poisoned dumplings (Nikkei)
12) Concern rising that the flap between Japan and China over who
poisoned the dumplings could affect the pending visit of President
Hu (Nikkei)
13) China proposes that U.S., DPRK sign a joint communiqu similar
to the one the U.S. and China signed in 1972

14) Japanese-American delegation of business leaders and other
dignitaries arrives in Japan for exchange meeting (Mainichi)

15) Foreign Minister Koumura tells UN special advisor Japan will
cooperate with UN on aid to Burma (Mainichi)

16) Iran's ambassador to Japan hopes Tokyo will play an intermediary
role in improving ties between Teheran and Washington (Yomiuri)

17) Koga reappointed head of the Association of Bereaved Families of
the War Dead (Mainichi)

18) Proposed restrictions on foreign investment in airports removed
as Prime Minister Fukuda steps in to the issue (Mainichi)

19) Government, ruling parties determined to get budget bill as well
bill amending Special Tax Measures Law through Lower House today
(Nikkei)

Articles:

1) TOP HEADLINES

Asahi:
Fleet chief of staff questioned destroyer crew without coast guard's
approval

TOKYO 00000538 002 OF 013

Mainichi:
Ishiba conducts second questioning of navigating officer of Atago

Yomiuri:
Toshiba, IHI to team up on nuclear power plant engineering business

Nikkei:
Teijin, Mitsubishi Chemical to mass-produce carbon fiber auto parts
starting in 2010

Sankei:
China indicates pesticide got mixed into dumplings in Japan,
probably aiming to seal off truth

Tokyo Shimbun:
China propose putting assertions by U.S., North Korea on Pyongyang's
declaration of nuclear programs in writing, using 1972 U.S.-North
Korea joint statement as reference

Akahata:
Japanese Communist Party Chairman Shii stresses need for thorough
probe into Aegis collision

2) EDITORIALS

Asahi:
(1) Confusion of Defense Ministry: Supreme commander is prime
minister
(2) DPJ's plan on road taxes: It is LDP's turn to take action

Mainichi:
(1) Defense Ministry in confusion: Prime Minister's Office must not
leave situation unattended
(2) Powell problem: Japanese baseball should regain humanity and
justice

Yomiuri:
(1) Textbook screening: Seek harmony between free discussion and
transparency
(2) Hurriedly work out measures to protect cultural assets

Nikkei:
(1) Postponement of restrictions on foreign ownership of airports
quite natural
(2) US recession fears growing

Sankei:
(1) Vague settlement of poisoned Chinese dumplings scare
unacceptable
(2) Teachers' illegal strikes: Education board must give thorough
instruction

Tokyo Shimbun:
(1) Prime minister must take action to resolve road-tax dispute in
Diet
(2) Thoroughly investigate Chinese dumplings scandal

Akahata:
(1) Reform guideline: Public hospitals cannot be protected only with
efficiency

TOKYO 00000538 003 OF 013

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, February 28

NIKKEI (Page 2) (Full)
February 29, 2008

08:34
Met with Chief Cabinet Secretary Machimura and Deputy Chief Cabinet
Secretary Futahashi at Kantei. Machimura remained.

SIPDIS

09:33
Met with Deputy Chief Cabinet Secretary Ono. Afterwards met with
State Minister in Charge of Economic and Fiscal Policy Ota.

10:01
Met with State Minister in Charge of Gender Equality Kamikawa. After
her, met with Administrative Vice Foreign Minister Yabunaka, and
Natural Resources and Energy Agency Director-General Mochizuki.
After them, met with former LDP Secretary General Nakagawa.

11:00
Met with Vice Indonesian President Kalla. Afterwards, met with
Ambassador to Russia Saito and MOFA European Affairs Bureau
Director-General Harada.

12:33
Met with Futahashi, joined by Machimura.

13:00
Attended a Lower House Budget Committee session.

18:03
Attended a session of the Council on Economic and Fiscal Policy held
at Kantei. Afterwards, met with the LDP Financial Reform Research
Council's Advisor Tanigaki.

19:05
Met with Deputy Foreign Minister Sasae.

19:38
Arrived at Kantei residence.

DEFENSE & SECURITY

4) USFJ realignment to make headway

YOMIURI (Page 4) (Full)
February 29, 2008

Yoshihiko Fukuda-the newly elected mayor of Iwakuni City in
Yamaguchi Prefecture-announced yesterday that he will accept the
government-proposed relocation of U.S. carrier-borne fighter jets to
the U.S. Marine Corps' Iwakuni base. The Japanese and U.S.
governments will now move ahead with plans in the process of
realigning U.S. forces in Japan. Meanwhile, the government will
unfreeze its base-related subsidization of Iwakuni City and push
ahead with the transferal of U.S. jets to Iwakuni while respecting
Iwakuni City's requests for public security and other measures. The
government also wants other anti-realignment municipalities to
change course.

TOKYO 00000538 004 OF 013

Mayor Fukuda addressed his city's municipal assembly yesterday at
the opening of its regular session yesterday, during which he
clarified his intention to accept the planned relocation of U.S.
carrier-borne aircraft. "The government has shown consideration to a
certain extent for our request to ease Iwakuni City's burden,"
Fukuda stated. "Basically," he added, "I think we should
cooperate."

The U.S. Navy plans to move 59 planes, including carrier-borne
fighter jets, and about 1,900 persons, including U.S. military
personnel, from its Atsugi base in Kanagawa Prefecture to Iwakuni by
2014. The U.S. Marine Corps will also relocate 12 planes, including
air tankers, and about 300 persons, including military personnel,
from its Futenma base in Okinawa Prefecture to Iwakuni. As a result,
Iwakuni will be the largest of all U.S. airbases in the Far East.

In return for hosting Atsugi-based U.S. carrier-borne aircraft,
Iwakuni City will ask the government to resume its frozen
subsidization of the city for its construction of a new hall (3.5
billion yen for the current fiscal year). In addition, the city will
ask the government to grant realignment incentive subsidies (13.4
billion yen in total according to the city's estimate) within the
current fiscal year. The city will also ask the government to take
measures for aircraft noise and public security.

The government will basically accept these requests from Iwakuni. In
particular, the government will make its utmost efforts to prevent
incidents since a large number of U.S. military personnel will live
in the city.

5) Quizzed MSDF sailor missing

SANKEI (Page 31) (Full)
February 29, 2008

A 34-year-old lieutenant commander belonging to the shore patrol
unit of the Maritime Self-Defense Force's Maizuru District
Headquarters has been missing, sources revealed yesterday. The MSDF
officer is suspected of having taken out confidential data about an
Aegis destroyer, according to the sources. In this info leak
incident, the officer was questioned by MSDF investigative
authorities.

According to informed sources, MSDF investigative authorities found
that MSDF data files had leaked on the Internet through the
file-swapping software Winny. As a result of MSDF investigations,
the MSDF discovered that the data files had leaked from a personal
computer used by the lieutenant commander at his home. The MSDF
investigative authorities looked closely into his several personal
computers at his home and discovered an Aegis destroyer's data that
falls under the category of "special defense secret" (tokubetsu boei
himitsu).

The MSDF lieutenant commander was questioned by MSDF investigators
on Feb. 23. The lieutenant commander fled near JR Kyoto Station on
his way back to the base along with his officer, according to the
sources. His whereabouts is still unknown, the sources said.

The MSDF is currently investigating a series of Aegis information
leaks with its in-house questioning of several thousand persons. In
March, the MSDF will punish all MSDF personnel whose infractions are
clear.

TOKYO 00000538 005 OF 013

The Aegis data, which was illegally taken out by the lieutenant
commander and saved in his home computer, is believed to be the same
as the data that was confirmed to have leaked in the series of
information leaks, in which another MSDF lieutenant commander was
arrested. The MSDF will scrutinize the data taken out by the
lieutenant commander and will also track its path. At the same time,
the MSDF is searching for his whereabouts.

6) Ishiba questioned chief navigator at his office on his own
desire

MAINICHI (Top play) (Excerpts)
February 29, 2008

In the wake of the recent collision between the Maritime
Self-Defense Force Aegis destroyer Atago and the fishing boat
Seitoku Maru, Defense Minister Shigeru Ishiba and other officials
questioned the Atago's chief navigator without obtaining approval
from the Japan Coast Guard (JCG). Regarding this matter, Ishiba
revealed yesterday before the House of Councillors Foreign and
Defense Affairs Committee that he had questioned the chief navigator
himself at his office based on his own decision. Ishiba said, "I
should have announced that I had questioned (the chief navigator)
myself," reversing his earlier statement that he had not contacted
any crew members. Now that it has become clear that Ishiba had
quizzed the navigator himself without a prior notice to the JCG,
which has the right to investigate, the defense minister is likely
to come under greater pressure to take responsibility.

On Feb. 25, Ishiba said before the House of Representatives Budget
Committee: "For the sake of fairness of investigations, I have not
contacted any crew members." But in the Upper House Foreign and
Defense Affairs Committee meeting yesterday, Ishiba withdrew that
statement, saying:

"It meant that (although I had questioned the chief navigator on the
day the collision occurred), I was not in touch with him when I made
that statement. I had no intention of covering that up. Although I
did not order (the Maritime Staff Office) to call the navigator to
the ministry, I do not think calling him to the ministry was
inappropriate, either. I just wanted to be informed of it
beforehand."

Ishiba admitted, however, that knowing that the navigator was being
questioned by the MSO, he had also decided to question the navigator
himself at his office. Administrative Vice-Defense Minister Kohei
Masuda also explained in a press conference yesterday: "(The
minister) decided that he, too, needed to grasp the situation."

7) Questioning conducted by MSDF chief of staff's decision without
defense minister's approval

SANKEI (Page 1) (Full)
February 29, 2008

It became clear yesterday that in the wake of the recent collision
between the Maritime Self-Defense Force Aegis destroyer Atago and
the fishing boat Seitoku Maru in waters off Cape Nojima in Chiba
Prefecture, the Maritime Staff Office (MSO) had called the Atago's
chief navigator to the Ministry of Defense (MOD) to question him
without Defense Minister Shigeru Ishiba's approval. It was also

TOKYO 00000538 006 OF 013

found that the Fleet Escort Force Command chief of staff had boarded
the Atago four and a half hours after the collision without sending
a prior notice to the Japan Coast Guard (JCG).

Defense Minister Ishiba explained before the House of Councillors
Foreign and Defense Affairs Committee that the chief navigator had
been called to MOD on Feb. 19, the day the accident occurred, at the
MSDF chief of staff's decision and that he was informed of it before
noon that day after the senior MSO officers finished questioning the
chief navigator. Ishiba then questioned the chief navigator himself
at his office. About the questioning at his office, Ishiba said, "I
thought it was not good to conduct questioning only by a limited
number of people, so I did it at my own decision."

Meanwhile, Administrative Vice-Defense Minister Kohei Masuda
explained yesterday that a fax message had been sent to the JCG
shortly before 4:00 p.m. on Feb. 19, reversing his earlier statement
denying the existence of any records on the questioning of the chief
navigator at the minister's office. Masuda also said that he "still
does not know" about what the MSO officers learned from the chief
navigator.

Further, the Fleet Escort Force Command chief of staff arrived at
the Atago by helicopter shortly after 8:30 a.m. on Feb. 19, four and
a half hours after the destroyer collided with the Seitoku Maru. It
also became clear that he quizzed crew members about the accident
for about one hour. Masuda also said: "The chief of staff boarded
(the Atago) by the order of the Fleet Escort Force commander, but he
did not obtain the approval of the JCG." Masuda, though, stopped
short of mentioning what was discussed on the Atago.

In calling the chief navigator to the ministry, MOD told the JCG
that it would use the helicopter to transport "injured persons," but
in fact, the navigator was transported to the ministry by different
helicopter. The helicopter carrying the chief navigator departed
form the Atago at 9:10 a.m. and arrived at MOD at 9:54.

8) Defense minister again emphasizes, "I'll resign if cover-ups
found" over Aegis ship collision

NIKKEI (Page 2) (Excerpts)
February 29, 2008

Defense Minister Shigeru Ishiba yesterday emphasized again at a
session of the Upper House Committee on Foreign Affairs and Defense
that he would resign if cover-ups or information manipulation by the
Ministry of Defense (MOD) and the Self-Defense Forces (SDF) over the
recent collision of the Maritime Self-Defense Force's (MSDF) Aegis
destroyer Atago and the fishing boat Seitoku-maru were found. MOD's
inappropriate acts have been found successively over the collision.
For instance, MOD was not cooperative toward the Japan Coast Guard
(JCG), which is investigating the incident. MDO misperceived facts,
and it was slow to report on and publicize the incident. Opposition
parties are gaining steam to drive the defense minister into
resignation from the post.

On top of them, another problem involving MOD was found yesterday.
It was that on the morning of Feb. 19, when the incident occurred,
the Maritime Staff Office (MSO) staff, without obtaining permission
from the defense minister, called the navigating officer of the
Atago to the office and questioned him. In this regard, Ishiba
noted, "(The MSO staff) should have obtained my approval

TOKYO 00000538 007 OF 013

beforehand," but he insisted that it was not wrong for the MSO to
hold the questioning.

When asked about why he initially did not reveal the fact that he
had questioned the navigating officer at noon of Feb. 19, Ishiba
explained: "I should have revealed it early on. I had no intention
at all of hiding it."

Asked about remarks made by the navigating officer during the
questioning, Ishiba stated, "Facts I heard from him were all put
down." Following Ishiba, Administrative Vice Defense Minister Kohei
Masuda backed down his remarks made at a press briefing on Feb. 27,
in which he said, "Neither recorder nor a minute existed," and he
modified those remarks.

9) Ishiba inspects collision site

MAINICHI (Page 1) (Full)
February 29, 2008

Defense Minister Shigeru Ishiba yesterday inspected for the first
time waters off Cape Nojima in Chiba Prefecture where the MSDF Aegis
destroyer Atago collided with the fishing boat Seitoku Maru (on Feb.
19). He headed for the collision site by SDF helicopter and boarded
the destroyer Akebono, which was searching for two missing
fishermen. The defense minister also took a firsthand look at the
accident prevention setup using radar and the search operation.

After the inspection, Ishiba said to the press: "An accident cannot
occur under normal circumstances. I felt that the system is designed
to catch any mistakes." He thus pointed to the possibility that the
Agato made some mistakes. As seen in the fact that the Atago was in
autopilot mode until one minute before the collision, it has become
clear that the destroyer had problems in avoiding the fishing boat.
Ishiba's inspection is aimed at ensuring that other destroyers have
appropriate systems to prevent accidents.

10) I Net tightening around Ishiba to force him to resign: Fierce
criticism of blunders coming from the opposition camp one after the
other (Tokyo)

TOKYO SHIMBUN (Page 2) (Excerpt)
February 29, 2008

Views in the ruling and opposition camps questioning the
responsibility of Defense Minister Shigeru Ishiba in connection with
the accidental collision of the Aegis destroyer Atago and a fishing
boat continued to harden yesterday.

A Liberal Democratic Party (LDP) lawmaker with experience as one of
the party's three top executives pointed out: "At the stage when the
results of the investigation into the cause of the accident and the
like are complete, Mr. Ishiba will likely then step down." A
mid-level lawmaker also said, "It is not inconceivable that he would
resign when measures to prevent a recurrence are set, and there is a
clear understanding of the cause of the accident."

FOREIGN RELATIONS

11) China denies contamination occurred in China in poisoned
dumpling scandal, upsetting NPA

TOKYO 00000538 008 OF 013

NIKKEI (Page 3) (Lead Paragraph)
February 29, 2008

There is a wide gap in views between Japanese and Chinese
investigators in the probe of the recent food-poisoning outbreak
involving Chinese-made frozen dumplings. Japan and China agreed to
conduct an investigation in close cooperation only a few days ago,
but both sides were at odds over the exchange of their data
yesterday. The National Police Agency (NPA) intends to call on China
for close cooperation in uncovering the cause of the incident, but
the joint investigation has already been disrupted at its very
beginning.

12) China's denial of being contamination source in tainted
dumplings scare sparking conflict between Japan, China; May affect
President Hu's planned Japan visit

NIKKEI (Page 3) (Full)
February 29, 2008

The Chinese Public Security Ministry yesterday denied the
possibility that methamidophos - the organic phosphorus pesticide
found in Chinese-made frozen dumplings involved in poisoning
incidents in Japan - had gotten mixed into the products in China.
This announcement is sparking conflict between Japan and China. If
no progress is made in the investigation, national sentiment will be
inevitably undermined. This conflict may also negatively affect the
planned visit to Japan by President Hu Jintao in April, betraying
the government's expectations.

In a press conference yesterday, Chinese Press Officer Liu Chien
Chao urged Japan to reaffirm its material evidence, following the
announcement by the Public Security Ministry. But Liu added: "I hope
this issue will not affect Japan-China relations." Japanese
officials have expressed a sense of distrust in China. Chief Cabinet
Secretary Nobutaka Machimura said in a press conference yesterday:

SIPDIS
"China should also make efforts."

The leadership of the Hu administration, which places emphasis on
relations with Japan, initially tried to settle the issue at an
early date. But a host of harsh views against Japan have been posted
on the Internet. If the Chinese government indicated a stance that
could be taken as making a concession to Japan, it might be under
heavy fire. In response to the announcement yesterday, the number of
comments sharply criticizing Japan has been significantly increasing
on the Internet, such as: "Japan put the guilt on innocent us. We
urge Japan to offer an apology."

If the cause is not uncovered, imports of Chinese food may further
decrease. In the aftermath of the Chinese dumpling scare, leading
Japanese frozen food manufacturers have seen their sales of products
for households sharply dropping. An employee of Nippon Suisan Kaisha
Inc. said: "Our sales have fallen by about 30 PERCENT below the
same period a year ago." Japan Tobacco Inc. (JT) also announced that
it would cancel its plan of selling starting on March 1 by its
subsidiary JT Foods Co. of two kinds of frozen products, including
one made by Tianyang Food Processing in Hebei Province, which
produced tainted dumplings.

Prime Minister Yasuo Fukuda said last night regarding the Chinese
government's announcement: "(The Chinese government) said that it
would like to thoroughly conduct investigation in cooperation with

TOKYO 00000538 009 OF 013

Japan. The announcement is very positive." He seems to be aiming to
calm down the situation.

Fukuda must anticipate that the planned Hu's visit to Japan will
provide a good opportunity to boost public support of his
administration. But the dumpling scandal and no progress in the gas
field development standoff are disappointing his expectation.

13) China suggests putting down both assertions of U.S., DPRK in
nuclear declaration document with 1972 U.S-China communiqu as a
reference

TOKYO SHIMBUN (Top play) (Full)
February 29, 2008

Yasunobu Kiuchi, Beijing

It was learned yesterday that the host nation China of the six-party
talks on the North Korean nuclear issue had suggested to the United
States that both assertions of the U.S. and North Korea be put down
in a nuclear declaration report, which North Korea is supposed to
present but which has been pending to date, with the so-called
"Shanghai Communiqu," a statement issued when U.S. President Nixon
visited China in February 1972, as a reference. This was revealed by
a couple of sources familiar with the six-party talks.

By giving consideration to North Korea's denial of nuclear
development based on enriched uranium and of the proliferation of
nuclear arms to Syria, China aims to make a breakthrough in the
stalled six-party talks. Aside from this proposal, the U.S.
reportedly has asked the North Koreans to shed light on its uranium
enrichment programs as well as the question of the proliferation of
nuclear arms separately from the initially-required submission of a
declaration of nuclear programs by North Korea. Coordination is
actively underway among the countries concerned over the nuclear
declaration issue.

The U.S. and some other countries have demanded that North Korea
make clear its uranium enrichment programs as well as the
proliferation of nuclear weapons in connection with a complete
declaration of North Korea's all nuclear programs in accordance with
the six-party agreement. North Korea, however, has denied any
nuclear suspicions; as a result, the six-party talks have hit a
snag.

According to a source involved in the six-party talks, China's
proposal is that America's views about uranium-enrichment programs
be also put down in the North's declaration of its nuclear programs,
including the state of its plutonium-based nuclear development, and
that based on the declaration, the six-party talks resolve the
nuclear issue.

Using the Shanghai Communiqu, which ended the hostile relationship
between the U.S. and China, as a reference, China came up with the
proposal. The communiqu specified the perception both the U.S. and
China agreed on after explaining their respective assertions in a
clear-cut manner.

On Feb. 19, U.S. Assistant Secretary of State Christopher Hill met
with his North Korean counterpart, Vice Foreign Minister Kim Gye
Gwan in Beijing and after the session, Hill said: "We exchanged
views on the (breakthrough) proposal shown by China."

TOKYO 00000538 010 OF 013

According to a source connected with the six-party talks, however,
the U.S. has not given the nod yet to China's proposal and has
indicated that some coordination will be necessary.

14) Japanese-American leaders to visit Japan tomorrow for Japan-U.S.
exchanges program

MAINICHI (Page 5) (Full)
February 29, 2008

A full-scale discussion will begin tomorrow on an initiative to
strengthen exchanges between Japan and the United States, a program
aimed at developing human resources, who would form the foundation
of the Japan-U.S. alliance. The program was agreed in a summit
meeting last fall between the leaders of the two countries. A total
of 14 Japanese-American leaders will arrive in Tokyo tomorrow. They
will pay their respects to Japanese political and business leaders,
including House of Representatives Speaker Yohei Kono, to deepen
interpersonal exchanges.

The initiative focuses on 1) the exchanges of experts, 2) grassroots
exchanges, and 3) the teaching of Japanese language.

The 14 Japanese-American leaders, who are men and women in their
thirties to fifties, are lawyers, university professors, and
business managers.

15) Foreign Minister Koumura tells UN special advisor Japan will
cooperate with UN on aid to Burma

MAINICHI (Page 5) (Full)
February 29, 2008

Foreign Minister Masahiko Koumura met yesterday with Ibrahim
Gambari, the UN secretary general's special advisor in charge of
Burma (Myanmar) issues. In the meeting, Komura told Gambari that
Japan would help promote the United Nation's "national economy
forum" concept, which is aimed to support Burma's effort for
amelioration of poverty and democratization. In the wake of the
incident involving Japanese journalist Kenji Nagai, who was killed
while gathering information in Burma, the government has suspended
part of its official development assistance to that country, but it
has now judged that it is possible to offer aid to Burma through the
United Nations.

16) New Iranian ambassador expects Japan to act as intermediary
between Iran, U.S.

YOMIURI (Page 2) (Full)
February 29, 2008

New Iranian Ambassador to Japan Abbas Araghchi yesterday held a news
conference in his country's embassy in Tokyo. He referred to
relations with the United States having been broken off since 1980,
and he asked Japan to act as an intermediary between the U.S. and
Iran so as to bring about a rapprochement. He said, "We hope to see
the Japanese government give advice to the United States to adopt a
wiser policy (toward Iran)."

Turning to relations between Japan and Iran, Araghchi stressed that
"the relations between the two countries continue to be in good

TOKYO 00000538 011 OF 013

shape, despite charges from the U.S. and European countries against
Iran" on the nuclear issue. Noting, "The Japanese (government) is
more familiar with the realities facing the Middle East and Iran's
role in the region than the U.S. (government)," Araghchi pointed out
that Japan was most qualified to urge the U.S. to shift its hostile
policy toward Iran.

Araghchi served as vice foreign minister in charge of such key
issues as the nuclear weapons and Iraq since 2005 until just
recently. He arrived at his post in early February.

POLITICS

17) LDP's Koga to remain Nippon Izokukai chairman

MAINICHI (Page 5) (Full)
February 29, 2008

The Japan Association for the Bereaved Families of the War Dead
(Nippon Izokukai), chaired by Makoto Koga, the ruling Liberal
Democratic Party's Election Committee chairman, held yesterday in
Tokyo a national convention of its directors and councilors. In the
convention, the association approved of the re-appointment of
Chairman Koga, Vice Chairman Hidehisa Otsuji, chairman of the LDP
caucus in the House of Councillors, and another vice chairman. Their
term in office is two years. Koga, who assumed the chairmanship in
2002, will be serving in his fourth term. The organization confirmed
that it would continue holding study sessions on the Yasukuni Shrine
issue, which were started last May.

ECONOMY

18) Clause restricting foreign investment in airport operators to be
deleted: Prime minister takes action to prevent discord in cabinet
by postponing decision-making; MLIT minister's resistance contained

MAINICHI (Page 2) (Excerpts)
February 29, 2008

Prospects are now good that the issue of restricting foreign
investment in airport-related companies will likely be settled with
the deletion of a foreign investment restriction clause from a bill
amending the Airport Development Law. Prime Minister Yasuo Fukuda
yesterday evening revealed his intention to reach a conclusion at
the end of the year on how such investment should be limited with
the security issue as the Ministry of Land, Infrastructure and
Transport (MLIT) insists in mind. He has avoided discord from
flaring up again in the cabinet by postponing decision-making to the
end of the year. He seems to have calculated that if the issue were
to become prolonged, his leadership could be questioned,
particularly with a mountain of other thorny issues unsettled, such
as Defense Minister Ishiba's responsibility over the Aegis
destroyer's collision accident and the appointment of a new Bank of
Japan governor.

The prime minister from the start was cautious about the idea of
limiting foreign investment in airport companies. He also played up
a policy of promoting foreign investment in Japan at the Davos
Conference in January. When former Liberal Democratic Party (LDP)
Secretary General Hidenao Nakagawa on Feb. 5 expressed his

SIPDIS
opposition to limiting foreign investment, Fukuda supported his
statement.

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Since MLIT Minister Tetsuzo Fuyushiba is stuck with the issue, the
prime minister has ostensibly taken the stance of watching the
coordination of views of government officials led by Chief Cabinet
Secretary Machimura. However, when a compromise plan to exempt

SIPDIS
already listed Japan Airport Terminal Co. from the foreign
investment restriction was about to be adopted, Fukuda rejected the
plan, saying, "The proposal is incompatible with my Davos
statement."

19) Government, ruling parties determined to get budget bill as well
bill amending Special Tax Measures Law through Lower House today

NIKKEI (Page 2) (Excerpts)
February 29, 2008

The government and the ruling parties intend to get the fiscal 2008
budget bill and the bill amending the Special Tax Measures Law,
including the maintaining of the provisional gas tax rate for
special-purpose road construction revenues, through the Lower House
today. Tension is growing in the Diet with the opposition camp
indicating a stance of opposing the appointments of a new Bank of
Japan (BOJ) governor and deputy governor by the Diet slated for next
week.

BOJ personnel appointments would be affected, if ruling camp force
budget bill through Lower House, says ruling camp

Referring to the fiscal 2008 budget bill, Prime Minister Yasuo
Fukuda told reporters, "It is time for the Lower House to end
deliberations." Liberal Democratic Party (LDP) Secretary General
Bunmei Ibuki during a meeting of LDP members said, "The Upper House
will become a main venue of deliberations on the budget bill
starting on March 1." The Lower House Budget Committee, and the
Financial Affairs Committee, which is deliberating on the bill
amending the Special Tax Measures Law, decided by virtue of
chairman's office at their directors meeting on Feb. 28, to hold a
winding-up question-and-answer session and a roll call. The Lower
House General Affairs Committee has also prepared for a roll call.

The opposition camp intends to oppose putting the budget bill to a
vote, insisting that full deliberations have yet to take place. In
the Democratic Party of Japan (DPJ or Minshuto), President Ichiro
Ozawa, Deputy Presidents Azuma Koshiishi and Naoto Kan and Secretary
General Yukio Hatoyama at party headquarters conferred on the issue.
Participants confirmed that in the event of the ruling parties
forcing the budget bill through the Lower House, they would boycott
budget deliberations in the Upper House starting next week. The DPJ
will also look into the possibility of rejecting a roll call on the
bill amending the Special Tax Measures Law, abandoning the mediation
proposal made by the Lower House speaker and the Upper House
president that some sort of conclusion should be reached before the
end of the year.

If the ruling camp railroads the budget bill through the Lower
House, it would also affect Diet approval of the selection of a new
governor and a new vice governor of BOJ with Koshiishi telling
reporters, "If they railroads the bill, it would be only natural
that it would affect the selection of a BOJ governor." With the
possibility of the appointment of a new BOJ governor missing the
March 19 deadline, when the incumbent rotates out, in mind, he said,
"If the BOJ governor's post becomes vacant in result, the government

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would be accountable for it."

SCHIEFFER

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