Cablegate: Japanese Morning Press Highlights 07/25/08

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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.

E.O. 12958: N/A
TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA

SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 07/25/08

Index:

Defense and security affairs:
1) Defense "fixer" and consultant Akiyama, known for his many U.S.
connections, arrested for tax evasion (Tokyo Shimbun)
2) Former Defense Minister Kyuma denies that any of defense "fixer"
Akiyama's money flowed to him (Asahi)
3) New law planned to protect defense and atomic-power secrets and
to unify existing system (Mainichi)
4) Okinawa Prefectural Assembly asks governor to cancel plan to
build new facility at Nago City to replace Futenma Air Station
(Akahata)

Anti-terrorist bill:
5) Ruling parties skittish about having to take a second Lower House
vote to override Upper House and pass extension of anti-terrorist
special measures law (Tokyo Shimbun)
6) Komeito's Upper House secretary general: Extension of
anti-terrorist law should be put off until the regular Diet session
that starts early next year (Mainichi)

Political agenda:
7) Komeito pressing for convening extra session in September
(Yomiuri)
8) Komeito's Kitagawa expects end-of-year Diet dissolution, says no
guarantee a cabinet shuffle will boost Fukuda administration's
popular support (Sankei)

9) Prime Minister Fukuda will decide after July 29 on his cabinet
shuffle (Mainichi)
10) Prime Minister is gathering personnel information, with
expectations in the party that cabinet shuffle could come early next
week (Asahi)

Diplomatic agenda:
11) Fukuda to meet China's President Hu Jintao at the Olympics
ceremony (Tokyo Shimbun)
12) Fact-finding mission to Sudan to study PKO options (Yomiuri)
13) Foreign Minister Koumura's Singapore diplomacy: Success in
"words" spoken but few "deeds" accomplished (Tokyo Shimbun)
14) Koumura able to meet his ROK counterpart fleetingly at the
Singapore conferences; Still no clue to resolving bilateral row over
latest Takeshima flap (Nikkei)
15) WTO farm talks: Japan finding itself increasingly isolated as
the U.S. and EU make proposal on important items that it finds
difficult to accept (Nikkei)

Articles:

1) Defense industry consultant arrested for alleged tax evasion

TOKYO SHIMBUN (Top play) (Abridged)
July 25, 2008

A Tokyo District Public Prosecutors Office task force yesterday
arrested Naoki Akiyama, 58, executive director of the Japan-U.S.
Center for Peace and Cultural Exchange, on suspicion of violating
the Income Tax Law (tax evasion). Akiyama is suspected of hiding
approximately 230 million yen in consultancy fees from
defense-related businesses and trading companies and of evading
about 74 million yen in tax payments. The task force teamed up with
National Tax Administration Agency authorities from the Tokyo

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Regional Taxation Bureau and searched the center's office and other
locations.

The allegations against Akiyama-who is said to be a channel
connecting Japanese and U.S. defense industries to politicians and
bureaucrats-came up during prosecutors' investigations into a
bribery scandal involving former Administrative Vice Defense
Minister Takemasa Moriya, 63, and defense contractors. Akiyama is
believed to have used some of the money to buy a luxury car and an
expensive wristwatch. The task force will investigate the case,
focusing on whether Akiyama paid defense-related lawmakers.

Commentary: Focus on how far to unveil defense interests

Akiyama is alleged to have had close ties with defense-related
lawmakers. With his arrest, prosecutors have now come to a key point
in their probe of defense interests that resulted in exposing
Moriya's bribery case.

A task force of the Tokyo District Public Prosecutors Office began
around the spring of last year to secretly investigate suspicions
over defense procurement, touched off by the internal trouble of
Yamada Corporation, a defense equipment trader. Prosecutors
continued investigating Motonobu Miyazaki, a former managing
director of Yamada Corp., over his golfing with and bribes paid to
Moriya.

After indicting Moriya, the task force looked into the flow of money
from Akiyama to defense policy clique lawmakers. Prosecutors
questioned defense-related business executives. However, the task
force appears to have failed to track the flow of money.

In that process, Akiyama was found to have failed to declare a
portion of his income from consultancy fees.

In 2005, Yamada Corp. was only the 39th-largest contractor of the
Defense Ministry among manufacturers and trading companies. Many
people probably think the exposed case is the tip of the iceberg.

The focus of investigations from now on is on how far the task force
can unveil the darkness of defense interests through its probe of
Akiyama.

2) Akiyama arrested; Kyuma denies inflow of funds into political
community

ASAHI (Page 4) (Excerpts)
July 25, 2008

In the wake of the arrest of Japan-U.S. Center for Peace and
Cultural Exchange executive director Naoki Akiyama, who has served
as a mediator between the defense industries of Japan and the United
States, the opposition bloc intends to pursue once again the
question of defense interests in the extraordinary Diet session in
the fall. Meanwhile, a senior official of the Defense Ministry,
which was rocked by a bribery scandal involving a former
vice-defense minister, said coldly: "There is no direct link between
Akiyama's arrest on suspicion of tax evasion and our ministry."

Democratic Party of Japan Secretary General Yukio Hatoyama yesterday
released a statement reading: "I strongly hope that the relationship
between defense-related companies and lawmakers, the veiled facts

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about defense equipment procurement, and the wasteful spending of
tax money will be thoroughly uncovered." DPJ Deputy President Naoto
Kan, too, said in a press conference: "Our stance of seeking
Akiyama's Diet testimony has not changed. If suspicions deepen, we
will beef up our efforts to clear up the truth."

Former Defense Minister Fumio Kyuma, who is on friendly terms with
Akiyama and is also serving as a director of the Japan-U.S. Center
for Peace and Cultural Exchange, made this comment to the press
corps in Tokyo: "I don't know the contents of anyone's personal
income. Mr. Akiyama may or may not have received money, but we
certainly did not. I didn't receive money, and I don't think any
other lawmakers received money, either." Kyuma thus indicated that
funds have not flown into the political community from Akiyama.

Akiyama has wielded significant influence over the Defense Ministry
and the Foreign Ministry on the strength of his close ties with
Kyuma and other former defense chiefs. A Japanese diplomat who used
to take care of Akiyama-led Japanese lawmaker delegations to the
U.S. at Japan's embassy in the U.S. indicated that the entire
embassy had treated the delegations very cautiously.

Akiyama reportedly has rapidly lost his influence since prosecutors
began investigating scandals that resulted in the arrest of former
Vice Defense Minister Moriya. In early November 2007, shortly after
a former Yamada Corp. executive was arrested, Akiyama expressed his
willingness to introduce a former senior U.S. Defense Department
official to a senior Defense Ministry official, his old friend. The
former high-ranking official, who was with a U.S. defense consulting
firm at the time, asked the Defense Ministry official in a meeting
for advice for winning an order (from the Defense Ministry) for the
Guam relocation plan. The Defense Ministry official thought Akiyama
was in the business of connecting people.

3) New law eyed for info security

MAINICHI (Page 2) (Abridged)
July 25, 2008

The government is considering creating a new law intended to protect
confidential information pertaining to Japan's national security
involving defense and atomic energy. There are now several laws to
punish information leakage and other infractions. However,
punishment varies with each law. Moreover, their deterrence is not
sufficient. The government will therefore unify these laws and
introduce stricter penalties.

A study group of the Ministry of Economy, Trade and Industry will
shortly release a report, which is expected to suggest the need to
create an information security law. METI will consult with relevant
government ministries and agencies, aiming to present a bill to the
Diet at its ordinary session next year.

The report says leaking information about defense or atomic energy
could result in seriously affecting national security as it would
heighten the danger of terrorism. In addition, the report also notes
that it would cause Japan to lose international trust. Last
December, a lieutenant commander of the Maritime Self-Defense Force
was arrested on the charge of violating a law for the protection of
secrets under an agreement reached between Japan and the United
States. The MSDF officer is alleged to have stolen confidential data
about an Aegis-equipment vessel.

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4) Okinawa Prefectural Assembly asks governor and other officials to
withdraw plan to construct new base (at Nago City replacing Futenma
Air Station)

AKAHATA (Page 3) (Excerpts)
July 25, 2008

In connection with the resolution opposing the construction of a new
base at Henoko district of Nago City, passed by the Okinawa
Prefectural Assembly (presided over by Yoshinobu Takamine) on July
18 by the full session, the assembly on July 24 presented a formal
request of Governor Nakaima and other prefectural organizations.

The delegation consisted of representatives of six opposition
groups, including the Japanese Communist Party. Representatives of
the ruling parties Liberal Democratic Party and New Komeito, which
opposed the resolution, did not accompany the delegation.

Delegation head Niisato in his request to Governor Nakaima said:
"The resolution reflects the will of the people. We would like you
to go along with the will of the people in order to stop the
building of a new base that will make the bases more permanent (in
Okinawa) and destroy the environment."

Nakaima replied: "Although I take the resolution seriously, I would
like to quickly complete the relocation according to our
commitment." He repeated his fixed position on the construction of a
new base.

5) Cautious view on readopting antiterrorism law emerging in ruling
parties

TOKYO SHIMBUN (Page 2) (Excerpts)
July 25, 2008

The current refueling law was readopted by the Diet in January this
year owing to the ruling coalition's efforts during the
extraordinary session that was convened last September to carry it
over to the year 2008 in the face of strong resistance from the DPJ.
Because the law expires on January 15, 2009, coordination is
underway to adopt a bill extending the legislation in the next
extraordinary Diet session.

LDP Secretary General Bunmei Ibuki, in a lecture meeting yesterday,
referred to the revision bill as the top priority in the
(extraordinary) Diet session. Former LDP Vice President Taku
Yamasaki, meeting with Prime Minister Fukuda on July 22, advised him
to convene the next extra Diet session early in consideration of the
time necessary for readopting the legislation.

Meanwhile, LDP Election Strategy Council Chairman Makoto Koga in a
speech on July 23 called for caution about deciding on the
convocation date for the adoption of the legislation by calculating
backwards.

New Komeito Secretary General Kazuo Kitagawa, in a press conference
yesterday, sided with Koga, saying: "We should discuss the matter
thoroughly with the DPJ. If we mention re-adoption, talks will not
move forward."

Koga and Kitagawa raised objections because they have an early Lower

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House dissolution in mind.

6) Komeito exec proposes putting off antiterror law extension

MAINICHI (Page 5) (Full)
July 25, 2008

A New Komeito executive, appearing on BS11 Digital's "Inside Out"
news program yesterday, insisted that the Diet should put off until
the ordinary session early next year deliberations on the bill
extending the new Antiterrorism Special Measures Law, which is to
expire in January. "We-not only in our party but also in the Liberal
Democratic Party-wonder if we will really have to do this during the
extraordinary Diet session," said Kentaro Koba, secretary general of
New Komeito's lawmakers in the House of Councillors. New Komeito
lawmakers are strongly calling for the ruling coalition's leadership
to avoid handling the issue of extending the law at this fall's
extraordinary Diet session, anticipating that the House of
Representatives could be dissolved for a general election later this
year or early next year.

7) New Komeito wants next extra Diet session to be convened in late
September

YOMIURI (Page 4) (Slightly abridged)
July 25, 2008

The New Komeito, the junior coalition partner of the ruling Liberal
Democratic Party (LDP), has called for opening the next
extraordinary Diet session in late September. With an eye on a
possible dissolution of the House of Representatives early next
year, the party has judged that a short-term extra session would be
a good idea. Since many in the LDP favor the convocation of the
session in late August, coordination is expected to be difficult.

New Komeito Secretary General Kazuo Kitagawa told the press
yesterday: "LDP Secretary General Bunmei Ibuki and I haven't talked
about an idea of opening the session in late August." He then said:
"I understand well" LDP Election Strategy Council Chairman Makoto
Koga's suggestion to convene the extra session in late September.

The reason for the New Komeito taking such a position is that with
the next Lower House election in mind, the party does not want to
give any chance for the Democratic Party of Japan (DPJ) and other
opposition parties to gain the advantage.

The New Komeito and the religious sect Soka Gakkai, the New
Komeito's chief backer, have placed priority on next summer's Tokyo
Metropolitan assembly election. So, the party hopes Prime Minister
Yasuo Fukuda will dissolve the Lower House early next year. The
party therefore is worried that an early opening of the extra Diet
session would have a negative impact on the Lower House election
because the opposition would start hitting the government and ruling
coalition for delaying measures to deal with soaring oil prices.

Some observers view that the fact that Junya Yano, a political
commentator and former New Komeito chairman, has filed a legal
action for damages against the Soka Gakkai is one reason for the New
Komeito calling for delaying the extra session. A senior LDP member
said: "I think the New Komeito does not want the opposition to call
Mr. Yano to testify as a Diet witness."

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The main issue in the extra Diet session is a bill amending the New
Antiterrorism Special Measures Law designed to extend the Maritime
Self-Defense Force's refueling mission in the Indian Ocean. In order
to take an overriding vote in the Lower House, the ruling coalition
envisions the convocation of the extra session in late August.

8) New Komeito's Kitagawa: There is no guarantee that cabinet
shuffle will raise cabinet support rates; Hopes for Lower House
dissolution before year's end

SANKEI (Page 4) (Excerpt)
July 25, 2008

New Komeito Secretary General Kazuo Kitagawa at a press conference
in the Diet building stated: "There is no assurance that a cabinet
shuffle will boost the popularity of the government. This is an
extremely high-level political decision. The question is how Prime
Minister Fukuda will make that decision." Many in the New Komeito
are reluctant about an early cabinet shuffle. So Kitagawa's remark
reflected the mood in his party.

Asked by reporters about the possibility of a meeting between Fukuda
and New Komeito leader Akihiro Ota, Kitagawa showed a negative view
on the possibility of their meeting in this week, saying: "They have
no plan. I haven't heard anything from Mr. Ota."

Kitagawa also said:

"It will be three years come September since the last Lower House
election. In some ways, there is nothing strange about not
dissolving the Lower House at anytime -- even more so, considering
the present political situation, I have told my party members that
they should be start getting ready after September because the
showdown comes next summer (Tokyo assembly election)."

He expressed his hope that the Lower House would be dissolved before
the end of the year. Referring to an extension of the New
Antiterrorism Special Measures Law, he took a cautious stance toward
a revote in the Lower House. He stated: "In order to extend the law,
the ruling and opposition camps should first discuss the matter well
so that the public will understand the extension."

9) Prime Minister Fukuda: I will decide on July 29 or later on
cabinet shuffle

MAINICHI (Page 1) (Full)
July 25, 2008

Asked by the press about a cabinet shuffle, Prime Minister Yasuo
Fukuda said last night:

"(A cabinet shuffle) is a blank slate, anyhow. I have yet to consult
with various persons. I should make a decision after hearing various
views in the Liberal Democratic Party (LDP) and considering the
entire situation and policies. I have to also think of Diet
management."

He indicated in his remarks that he would decide whether to shuffle
his cabinet or not after July 29, when the government comes up with
budgetary request guidelines for fiscal 2009, while considering the
timing of convening the next extraordinary Diet session.

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10) Prime minister studying situation, including timing for
convocation of extra Diet session, for cabinet shuffle; Decision
possibly next week

ASAHI (Page 4) (Excerpts)
July 25, 2008

Prime Minister Yasuo Fukuda, admitting last night that he is
considering a cabinet shuffle, a matter of great concern for many,
indicated that he would make a final decision in consideration of a
long-term political timetable, including the timing for convening
the next extraordinary Diet session. The prime minister revealed
this view at his official residence.

The prime minister said about a cabinet shuffle: "I think I must
reach a conclusion after hearing a variety of views and considering
the overall situation, including policy." He also indicated that has
not decided on a party-head meeting with New Komeito Representative
Akihiro Ota.

LDP Secretary General Bunmei Ibuki, attending a lecture meeting
earlier in the day in Osaka, indicated that the prime minister would
make a final decision possibly early next week on whether to shuffle
his cabinet. Ibuki said: "The question is whether the outstanding
issues should be handled by the current cabinet or by new members.
Prime Minister Fukuda will make a decision around next week."

About the timing for the convocation of the next extraordinary
session of the Diet, there still remains a gulf between the LDP
leadership, which calls for late August, and New Komeito and some
LDP members, who favor September.

Ibuki renewed his call for late August, saying: "Risk management
against the worst-case scenario is necessary." Former LDP Secretary
General Taku Yamasaki in Jakarta yesterday, too, called for an early
convocation, saying to the press corps: "The prime minister must not
make the same mistake as last year's management of Diet business. It
would be disastrous to allow things to run into next year and then
dissolve the Diet for a general election right after passing an
extension of the refueling law through a revote in the Lower House.
The extraordinary Diet session must come to a close in November."

Yamasaki also said: "A budgetary plan itself will become the LDP-New
Komeito's manifesto (campaign pledge) for the next general election.
The plan must be compiled in a calm atmosphere. (To do so), the
political timetable must be arranged in a way to compile the
budgetary plan after the extraordinary Diet session closes."

11) Japan-China summit meeting during Beijing Olympic ceremony:
China taking stance of attaching importance to Japan

TOKYO SHIMBUN (Page 1) (Full)
July 25, 2008

It was learned on July 24 that coordination is underway for Chinese
President Hu Jintao and Premier Wen Jiabao to separately meet with
Prime Minister Yasuo Fukuda when he attends the opening ceremony of
the Beijing Olympic Games on August 8. China's two top leaders will
reportedly meet with only a few heads of states as part of their
Olympic diplomacy to be carried out at the opening ceremony, which
will bring together world leaders.

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According to the same source, a total of 90 chiefs of states and
prime ministers will attend the ceremony. Hu is expected to
separately meet with several chief-of-state-class persons, including
U.S. President Bush. He also plans to meet with Fukuda for about 30
minutes. This will be their third meeting this year. They will
likely give an overview of the recently improved Japan-China
relationship and discuss ways to move it forward.

Amid a growing mood of boycotting the opening ceremony among Western
countries over the Tibet issue, Fukuda and Bush at an early stage
expressed their intention to attend the ceremony. There is a strong
mood in China of paying respect to them as "benefactors."

12) Fact-finding mission to be dispatched to the Sudan for PKO
survey

YOMIURI (Page 4) (Full)
July 25, 2008

The government yesterday decided to send a local fact-finding
mission to the Sudan from July 27 to Aug. 4 to prepare for a
dispatch of Self-Defense Forces officers to the UNMIS Headquarters
for peacekeeping operations. The mission will consist of
approximately 15 officials from the Foreign Ministry, Defense
Ministry and Cabinet Office. They will visit Khartoum in Sudan where
the UNMIS Headquarters is located, and question the Sudanese
government and UNMIS officials about the security situation and
other matters.

13) Foreign Minister Koumura wraps up trip to Singapore: Produces
results in words but fails to extract pledge for action on
abduction, bilateral relations issues

TOKYO SHIMBUN (Page 2) (Full)
July 25, 2008

Foreign Minister Masahiko Koumura has wrapped up his schedule in
Singapore, including taking part in the ASEAN (Association of
Southeast Asian Nations) Regional Forum (ARF) and the foreign
ministerial of members of the six-party talks on North Korea's
nuclear program. He exchanged views on bilateral relations with the
U.S., South Korea and North Korea at those venues. However, he has
failed to find a breakthrough in the pending issues, remaining
unable to change pledges into action.

Japan in particular has put a lot of work into getting on base to
develop relations with North Korea, including the settlement of the
abductions of Japanese nationals. Foreign Minister Pak Ui Chun at
the ARF said, "It is good that Japan-North Korea talks have been
resumed." He has pledged in front of foreign ministers from various
countries to make efforts to improve bilateral relations in a
proactive manner.

U.S. Secretary of State Rice at the foreign ministerial on the 23rd
stressed, "It is necessary for North Korea to take action to reach a
settlement."

However, despite those statements, Japan and North Korea failed to
work out a specific schedule for and method of reinvestigation into
the abduction issue.

August 11 is approaching -- the day when the U.S. removes North

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Korea from its list of state sponsors of terrorism, which has served
as pressure on that nation. Commenting on the statement by Pak,
Koumura after the serious of meetings, told reporters, "His
statement indicated that he wanted to give the impression that talks
are underway smoothly." He expressed a sense of caution toward
efforts to improve Japan-North Korea relations moving at the pace of
North Korea.

Referring to Japan-South Korea relations, which have strained with
Japan describing the Takeshima Island (Dokdo in Korean), which both
Japan and South Korea claim, in a teaching manual for the new school
curriculum guidelines for social studies textbooks for middle
schools, Koumura underscored to reporters, "We must improve
relations with South Korea in a cool-headed manner from a broad
standpoint."

Koumura said that he had a meaningful exchange of views with Foreign
Affairs and Trade Minister Yu Myung Hwan on the 22nd. However, South
Korea has not even admitted to the holding of such a meeting,
highlighting that the issue is so deep-rooted that it cannot be
settled through a dialogue between the foreign ministers of the two
countries.

14) No clue for Japan, ROK to repairs relations strained over
Takeshima issue; Two foreign ministers fleetingly meet in Singapore

NIKKEI (Page 2) (Excerpt)
July 25, 2008

There is still no way in sight for repairing relations between Japan
and South Korea strained over the Takeshima Isles (Dokdo in Korean)
issue. Foreign Minister Masahiko Koumura, who has been visiting
Singapore in connection with ASEAN-related events, searched for an
opportunity to meet South Korean Minister of Foreign Affairs and
Trade Yu Myung-hwan, but they were only able to converse briefly.
For the time being, there is no prospect in sight for holding a
meeting of the two foreign ministers.

15) WTO agricultural talks to focus on 4 PERCENT as proportion of
key items to all farm products: Japan could find itself isolated

NIKKEI (Page 1) (Full)
July 25, 2008

It has been learned that European countries and the U.S. at a
ministerial meeting held in the early hours of July 24 proposed
limiting the proportion of key farm items that are eligible for
exceptionally small tariff cuts to all farm products to 4 PERCENT .
The aim is to press farm-products-exporting emerging countries,
which are opposing cuts in tariffs on mined and manufactured
products, to make concessions. The outlook is that the talks will
move forward with focus on the adoption of 4 PERCENT . There is
concern that Japan, which has been insisting on 8 PERCENT , might
find itself isolated.

The creation of rules for cutting tariffs on farm products and mined
and manufactured products is the topic of discussions at the ongoing
multilateral trade liberalization talks, joined by 153 countries. A
cabinet-level meeting of small number of countries, joined by Japan,
the U.S., the EU, India, China, Brazil and Australia, has been held
since July 23. With participating countries urged to make an
ultimate compromise, the talks have entered a key stage of whether

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they can reach an agreement or break down.

In the agricultural area, one of the key negotiation areas, the U.S.
and the EU have proposed setting the proportion of key items to all
farm products at 4 PERCENT , the lower limit of the 4 PERCENT -6
PERCENT range as stipulated in the chairman's draft proposal. By
reducing farm items protected with high tariffs, they adopted a
stance of opening their farm markets to emerging and developing
countries, which want to aggressively expand exports of farm
products.

Japan has 1,332 farm products, of which more than 100 PERCENT
tariffs are imposed on 125 items. If the proportion of key items is
set at 4 PERCENT , only 53 items, such as rice and sugar, would be
categorized as key items. Japan's stand had insisted on securing 8
PERCENT .

The EU had been in line with Japan for the purpose of protecting
domestic agriculture. However, it has taken farm products exporters'
stand in order to move the talks forward. Though the U.S., a farm
product exporter, which had calling for limiting the proportion of
key items to 1 PERCENT , agreed to adopt 4 PERCENT .

Seven leading countries will again meet on the afternoon of July 24
and deepen discussions further. The next focus of attention is how
to reach a compromise on the scope of cuts in tariffs on mined and
manufactured products, regarding which the chairman's proposal
allows latitude between 19 PERCENT and 26 PERCENT .

ZUMWALT

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