Cablegate: Daily Summary of Japanese Press 10/24/08

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SECDEF FOR JCS-J-5/JAPAN,
DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA
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CINCPAC FLT/PA/ COMNAVFORJAPAN/PA.

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TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA

SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 10/24/08

INDEX:

(1) Prime Minister Aso meets with Chinese leaders: Japan-China
hotline to be reopened (Mainichi)

(2) Prime minister instructs ruling parties to study raising
consumption tax after economy recovers (Asahi)

(3) With eye on general election, Aso posits consumption tax hike,
aiming at displaying leadership, as well as to underscore difference
from DPJ (Asahi)

(4) New Komeito keeps silence, while concealing its real desire for
early Lower House dissolution for sake of campaign cooperation
(Asahi)

(5) North Korea, aiming at obtaining energy aid after delisting,
takes hard-line stance toward Japan for not paying its share
(Sankei)

(6) Japan-India nuclear cooperation: Dialogue needed for nuclear
nonproliferation (Asahi)

(7) NPT at greater risk due to U.S.-India nuclear agreement; Japan
must take initiative in nuclear nonproliferation (Mainichi)

(8) TOP HEADLINES

(9) EDITORIALS

(10) Prime Minister's schedule, October 23 (Nikkei)

ARTICLES:

(1) Prime Minister Aso meets with Chinese leaders: Japan-China
hotline to be reopened

Mainichi Online (Full)
13:16. October 24, 2008

Beijing, Reporter Tamotsu Takatsuka

Prime Minister Taro Aso, who is now visiting China to attend the
Asia-Europe Meeting (ASEM), on the morning of October 24 separately
met with President Hu Jintao and Premier Wen Jiabao at the Great
Hall of the People for about 30 minutes each. This is the first time
for him to meet with both leaders. They agreed to reopen the hotline
between the two countries. Leaders of the two countries vowed to
continue to develop mutually beneficial strategic relationship with
the aim of building the relationship of trust. They also exchanged
views on the financial and economic situations, as well as signed a
Japan-China Consular Agreement designed to improve the protection of
the citizens of both countries.

This is the fourth bilateral summit with Hu Jintao and second with
Wen Jiabao this year, if those held during the previous Yasuo Fukuda
administration are included. Aso took the stance of stressing the
close relationship between the two countries.

During his meeting with Hu, Aso called for building a relationship
of trust in which the presence of the leaders of the two countries
would be prominent. The reopening of the hotline is expected to

TOKYO 00002978 002 OF 013

enable the leaders of the two counties to be in immediate and close
contact, according to a Foreign Ministry source. The hotline between
the two countries was established when then Premier Zhu Rongji
visited Japan in October 2000. However, with bilateral relations
deteriorating due to former Prime Minister Junichiro Koizumi's
visits to Yasukuni Shrine, it was hardly ever used.

Aso sought countermeasures from the Chinese side regarding the
incident of poisoned frozen gyoza dumplings made in China, by
conveying to him Japan's domestic views about food safety.

He also brought up the North Korea issue and confirmed cooperation
between the two countries at six-party talks for the
denuclearization of that country. He asked for cooperation from the
Chinese side for the settlement of the abduction issue as well.

In the meeting with Wen, the two leaders signed a Japan-China
Consular Agreement, which is designed to improve the protection of
the citizens of each country, including the event that citizens are
detained in the other country, the concerned country is obligated to
notify the consular office of the incident within four days. They
also exchanged a paper ratifying a Japan-China Treaty on Cooperation
on Criminal Matters, which enables investigative officials of the
two countries to exchange information without using a diplomatic
channel.

Aso gave a speech at a ceremony commemorating the 30th anniversary
of the Japan-China Peace and Amity Treaty held on the afternoon of
the same day. He stressed that common benefit is important both for
Japan and China. Regarding the history issue, he stressed that
modestly looking back on the past and building the future together
is the responsibility of the present generation in preparation for
the next generation.

At the outset of the talks, Wen said, "Your attendance at ASEM is
the manifestation of your attaching importance to cooperation
between Asia and Europe, and between Japan and China. We welcome
your visit to China from the bottom of our hearts." Aso replied,
"Thank you for your welcoming me. I would like to congratulate you
on the success of the Beijing Olympics."

(2) Prime minister instructs ruling parties to study raising
consumption tax after economy recovers

ASAHI (Top Play) (Full)
October 24, 2008

In compiling a new economic stimulus package, Prime Minister Aso
instructed the LDP and the New Komeito to look into a mid-term
program for securing stable fiscal resources to finance social
security measures. He gave this order with a hike in the consumption
tax after the recovery of the economy in mind. In the meantime, as a
measure for regional areas, he also ordered them to consider the
largest-ever housing loan tax break, by allocating approximately 1
trillion yen to them from special road-construction funds. He thus
indicated a stance of doing his utmost to shore up the economy over
the short term.

The prime minister appears to aim to clarify differences in campaign
pledges with the DPJ, by putting up economic stimulus measures as
one of the commitments for the upcoming general election.

TOKYO 00002978 003 OF 013

He on the 23rd met with LDP Secretary General Kosuke Hori, his New
Komeito counterpart Natsuo Yamaguchi, and others at the Kantei. The
two secretaries general briefed him on the ruling parties' plan for
the new economic stimulus package, which includes an increase in
highway tolls and a fixed-rate tax cut.

The prime minister ordered them to include the following four items
in the package: 1) compiling a mid-term tax system program for a
future hike in the consumption tax; 2) allocating approximately 1
trillion yen to local governments; 3) implementing the largest-ever
housing loan tax cut; and 4) reducing the tax burden, by expanding
areas eligible for depreciation regarding investment for energy
saving and new energies.

The government and the ruling parties will formally decide on the
size of the budget and funding resources on the 30th, after
readjusting the new economic stimulus package. The prime minister
will release the final plan at a press conference the same day.

After the talks the prime minister said, "Nobody would consider
hiking the consumption tax when the economy is rapidly losing
steam." He also told reporters, "It is clear that when the economy
has recovered over the mid-term, fiscal resources to finance social
welfare-related areas, such as nursing care and welfare, will be
running short. In that sense, it is likely that a hike in the
consumption tax will be considered." The prime minister thinks that
it will take three years for the Japanese economy to recover. He
thus apparently indicated his intention to consider raising the
consumption tax after putting the economy on a recovery track in
three years' time.

According to one participant, the prime minister categorically said
to ruling-party members, "It is not until the economy recovers that
conditions for a tax hike are met. The consumption tax will serve as
a stable funding resource. I must make it clear that I will raise
the consumption tax when conditions are met." He thus reportedly
instructed the ruling parties to consider mentioning a road map for
tax system reform, including the consumption tax, in the mid-term
program.

The DPJ is keeping mum about the consumption tax. It appears that
another aim of Aso is to highlight differences with the DPJ by
referring to a consumption tax hike, thereby indicating a stance of
the LDP, which is tackling tax code reform as a responsible party.

In the meantime, Aso ordered participants to expand the scale of the
housing loan tax break from the current maximum 1.6 million yen
deduction from taxable income to the largest-ever amount. The
largest-ever deduction of 5.875 million yen was implemented in 1999
and 2000.

Regarding measures to shore up regional areas, the prime minister
reportedly said, "Use special-purpose road construction funds. They
can be used without restrictions, if they are reallocated for other
uses. I will give 1 trillion yen to local governments. If they want
to build roads, they can do so."

Concerning a hike in highway tolls, Aso said, "The DPJ said that
they would make expressways toll-free." He then told participants to
consider far-reaching measures in preparation for the upcoming
election. The government and the ruling parties agreed to implement
a time-limited cut in the corporate tax rate targeting small- and

TOKYO 00002978 004 OF 013

medium-size businesses.

(3) With eye on general election, Aso posits consumption tax hike,
aiming at displaying leadership, as well as to underscore difference
from DPJ

ASAHI (Page 2) (Full)
October 24, 2008

Prime Minister Aso, who predicts that the Japanese economy would
require three years to reach as state of recovery, said yesterday
that the government would raise the consumption tax in the future.
Aso ventured to step into the "taboo" area of lawmakers by talking
about a consumption tax hike before a general election. He
apparently wants to underscore the differences in his policy stance
from that of the Democratic Party of Japan (DPJ). He is also aiming
to impress people with his leadership in having the government and
the ruling coalition lay out a new package of economic stimulus
measures by the end of this month.

In meeting with Liberal Democratic Party (LDP) Policy Research
Council Chairman Kosuke Hori, New Komeito Policy Research Council
Chairman Natsuo Yamaguchi, and others at the Prime Minister's Office
last evening, Prime Minister Aso said: "If we fail to announce the
revenue sources, our stance will be the same as the DPJ's."

Although Aso had indicated that he would not hike the consumption
tax for three years in line with his policy of giving priority to
first boosting the economy, he asked senior LDP members to draw up a
plan to raise the tax in the future. His prediction of three years
to bring about a recovery indicates that the "seal" could be removed
three years from now.

Lawmakers hesitate to take up the issue of raising the taxes before
a general election. Former Prime Minister Fukuda once voiced
eagerness to raise the consumption tax just after assuming office,
but he sidestepped the issue in the end, saying: "We will consider
the possibility, with a span of two to three years in mind." Aso,
however, is aiming to lay the groundwork for Lower House dissolution
by highlighting the main point at issue with the DPJ.

The DPJ's policy pledges include a 26,000 yen monthly child-rearing
allowance, state subsidies for individual farm households, and other
costly measures. Prime Minister Aso has criticized the main
opposition party since the LDP presidential election campaign,
saying: "Calculated roughly, 17-20 trillion yen will be needed to
implement its pledges, but the DPJ has yet to explain where the
fiscal resources will come from."

In a policy speech on Sept. 29, Aso unprecedentedly posed questions
to the DPJ about fiscal resources to realize its policy pledges, but
DPJ President Ozawa said the party would completely restructure the
government's fiscal management structure. The exchange of words
between them went nowhere.

The new economic package due out later this month includes a number
of pork-barrel-nature tax-cut measures, such as flat-sum tax cuts
and a reduction of taxes on home mortgages. The government plans to
finance these measures with reserve funds for the time being. But if
it can announce specifics on where the necessary revenues would come
from, the package will become more acceptable to people. With the
difference stressed between the LDP and the DPJ over the issue of

TOKYO 00002978 005 OF 013

fiscal resources, the way will be paved for the Lower House
election.

In accordance with this calculation, the government appointed
National Conference on Social Security Chairman Hiroshi Yoshikawa as
a private-sector member of the Council on Economic and Fiscal Policy
early this month. A close aide to the prime minister said: "We
tapped him in anticipation of his playing a mediatory role between
the economic panel and the social security panel."

The social security panel announced estimated medical and care
costs, as well as the case of introducing a system of using tax
revenues to pay basic pension benefits. To cover these expenses, it
would become necessary to hike the consumption tax to a level as
high as 20 PERCENT . An aide to the prime minister said: "Discussion
of fiscal resources should be conducted in the social security
council, and the economic panel should come up with a plan for
consumption tax hike."

The theme of discussion in the first meeting on Oct. 17 of the
economic panel after Prime Minister Aso assumed office was how to
reform the social security system, the tax system, and the fiscal
system simultaneously. In this meeting, Aso made this statement:
"When asked about the fiscal resources for our economic stimulus
measures, we must properly explain where the revenues would come
from. Our party, as the governing party, must prepare itself to be
able to do so."

Citing in this meeting the results of the opinion poll conducted in
2001, when he was LDP Policy Research Council chairman, Aso said:
"Some 50 PERCENT of respondents said that it would be unavoidable
to raise the consumption tax to 10 PERCENT to finance social
security and pension payments." He showed that the public can be
expected to show understanding about a consumption tax hike to pay
social security outlays.

Even so, the consumption tax rate has stayed at 5 PERCENT since
1997. The focus of attention is on whether Aso would be able to step
into this difficult challenge, an area in which even the former
popular prime minister, Junichiro Koizumi, refrained from setting
foot. An aide to Aso said: "I think there is no other lawmaker than
Prime Minister Aso who can raise the consumption tax. He can be
expected just before the general election to come up with a policy
leading to raising the consumption tax."

(4) New Komeito keeps silence, while concealing its real desire for
early Lower House dissolution for sake of campaign cooperation

ASAHI (Page 4) (Abridged slightly)
October 24, 2008

By Hisashi Ishimatsu, Hiroshi Samejima

Prime Minister Taro Aso has been unable to determine when to
dissolve the Lower House, while the New Komeito, which has loudly
called for early dissolution of the chamber, is now quiet. The
party, though irritated with the prime minister's indecisiveness,
cannot afford to suggest a departure from the ruling coalition. As
such, the New Komeito seems to have no other option but to wait
patiently for the prime minister's decision, believing that he will
dissolve the chamber at the end of October.

TOKYO 00002978 006 OF 013

The New Komeito held an executive meeting on Oct. 23. In the
session, the members confirmed the maintenance of the party's
campaign setup for the envisioned election on Nov. 30. The voice of
Secretary General Kazuo Kitagawa, who regards himself as Prime
Minister Aso's close friend, was constrained. He simply said: "The
LDP is split over whether to dissolve the Lower House."

The New Komeito still pins hopes on Lower House dissolution at the
end of October when additional economic measures would be put
together and the refueling assistance legislation is expected to
clear the Diet. The New Komeito relies heavily on its local chapters
and its support organizations and requires a long period of time
making preparations for an election. To such a party, it is
difficult to take the heat out of its organizations that are in high
gears for an election, and once they geared down, it is even more
difficult to heat them up again. The party's powerful support
organization, Soka Gakkai, too, thinks early dissolution provides a
chance of victory, with a senior member saying, "The cabinet's
support rates are somewhat low, but we still can turn the tables
with thorough preparations."

The party eyes a flat-sum tax cut as a showcase step, but there is
no guarantee that it can win a huge tax cut to satisfy low- and
middle-income earners, the party's core supporters, in the year-end
tax reform discussion. New Komeito Representative Akihiro Ota thinks
his party should assert that there will be no fixed-amount tax cut
unless the New Komeito wins the next election.

To begin with, it was the New Komeito that opened the door to Lower
House dissolution for a snap general election. Former Prime Minister
Yasuo Fukuda walked off the job because the New Komeito demanded the
dissolution. The party pressed Fukuda hard to dissolve the Lower
House before the end of the year from its desire to focus on next
summer's Tokyo Metropolitan Assembly election.

The party had envisioned replacing Fukuda with the nationally
popular Aso as the figurehead of the ruling coalition and holding a
general election under him. The plan came true up until the
establishment of the Aso administration. Prime Minister Aso gave a
nod to the flat-sum tax cut and the Soka Gakkai geared up, assuming
that the election would take place in early November. But the
cabinet's support ratings remained unexpected low, and the financial
crisis also occurred. Given the situation, the prime minister
dropped a plan to dissolve the Lower House at the beginning of the
current extraordinary Diet session.

The New Komeito pressed former Prime Minister Fukuda hard for
dissolving the lower chamber, but it does not show any signs of
doing so for Aso now. A loud call for early dissolution in the
closing days of the Fukuda administration left ill feelings between
the LDP and its coalition partner. Another invasion of the prime
minister's right to dissolve the Lower House might harm the
relationship between the two parties beyond repair.

A senior New Komeito lawmaker commented: "Even if the prime minister
decides to postpone the dissolution, we will have to accept it. We
cannot press him by dangling the possibility of dissolving the
coalition arrangement. LDP votes are especially vital for
Representative Ota and Secretary General Kitagawa who are scheduled
to run in single-seat constituencies. As long as the New Komeito
cooperates with the LDP in campaigns, the former cannot think of
dissolving the coalition. Further, the party cannot find anyone who

TOKYO 00002978 007 OF 013

can replace Prime Minister Aso as the "face" of the LDP-New Komeito
administration.

At the same time, Aso's failure to meet the New Komati's
expectations for an early dissolution is likely to result in
mistrust in the prime minister. Secretary General Kitagawa, who has
served as a go-between, is under heavy pressure from within the
party and Soka Gakkai because the prime minister has been slow to
determine when to call the next general election. If the major
opposition Democratic Party of Japan takes a confrontational stand,
calls for Diet testimony by former Komeito Chairman Junta Yano and
Soka Gakkai executives might grow louder.

"With a delayed election, we won't be able to assist the LDP because
we will be busy just taking care of our own campaigns." There is no
guarantee that these words by a New Komeito executive intended to
apply pressure on Aso by alluding to an ill effect on campaign
cooperation will reach the prime minister.

(5) North Korea, aiming at obtaining energy aid after delisting,
takes hard-line stance toward Japan for not paying its share

SANKEI (Page 7) (Full)
October 24, 2008

By Takashi Arimoto in Washington

In connection with the nuclear issue, North Korea is taking a
hard-line stance toward Japan's paying its share of energy
assistance promised that country. After having achieved its
long-time goal of being removed from the U.S. list of states
sponsoring terrorism (SST) list, North Korea is now reacting
strongly toward the Japanese government for holding back aid unless
the abduction issue first makes progress. The DPRK even wants to
exclude Japan from the Six-Party Talks on the nuclear issue. A U.S.
government-source said the U.S. is trying to solve the problem of
Japan not providing energy aid by requesting Australia to supply
Japan's share. There is new concern, however, as to how seriously
North Korea will now work on the abduction issue.

The Six-Party Agreement in February 2007 stipulated that financial
and energy aid equivalent to one million tons of heavy oil would be
provided to North Korea in exchange for its declaration of its
nuclear program and the disablement of its nuclear facilities. The
share of each country is not specifically stated in the agreement,
but there is an implicit understanding that five countries would
equally share 200,000 tons (equivalent to approximately 16 billion
yen) (of heavy oil).

Japan, because of its abduction issue with North Korea, has been
saying that it would participate (in providing aid) as soon as
possible, once the situation was settled. Prime Minister Taro Aso
told President Bush who notified him on the removal of North Korea
from the SST list that (Japan) would not participate in the energy
aid, since there had been no progress in resolving the abduction
issue.

North Korea reacted sharply to this and demanded that Japan should
be excluded from the Six-Party Talks. A source in the talks,
referring to this reaction, pointed out: "North Korea knows well
that the U.S. would never agree to the exclusion of Japan, which
would lead to a collapse of the Six-Party Talks. After the country

TOKYO 00002978 008 OF 013

was successfully de-listed from the SST list, North Korea is just
taking the offensive for quick practical gains during the term of
the Bush administration."

The U.S. understands Japan's "special situation," but it has
requested Australia to provide Japan's share to solve the problem of
the energy aid. The U.S. is seeking Australia's participation in
providing energy aid from the view point of regional security. There
is also the fact that Australia has already provided some assistance
to North Korea, but the U.S. remains reluctant to change the
framework of the Six-Party Talks by adding Australia.

U.S. State Department Spokesman McCormack took an optimistic view
about the resolution of the issue by saying that the five countries
have strong confidence that they can fulfill their duty (of
providing heavy oil as aid). However, one U.S. government source
said: "Although we hope Japan-North Korea negotiations will resume
before the next round of Six-Party Talks, we are concerned as to how
seriously North Korea will engage in them.

(6) Japan-India nuclear cooperation: Dialogue needed for nuclear
nonproliferation

ASAHI (Page 11) (Full)
October 24, 2008

Yukifumi Takeuchi, senior writer

The Oct. 22 Japan-India summit did not step into the issue of
concluding a nuclear agreement on cooperation in such areas as
atomic power generation. However, the United States and India have
now reached a nuclear accord, which has now come into effect. In
addition, some other countries are also apparently geared up to make
market inroads. Meanwhile, it also looks like there will be strong
pressure from within Japan's business community. However, a negative
impact of nuclear cooperation between the United States and India is
already looming. The Japanese government will have to make a
difficult decision.

The Nuclear Suppliers Group (NSG), including Japan, has so far taken
a 'north wind' policy of embargoing nuclear-related materials to
India, which is not a signatory of the Nuclear Nonproliferation
Treaty (NPT). India has therefore been falling behind in developing
atomic power plants. In September, however, the NSG accepted the
option of calling off its embargo on nuclear fuel and reactors to
India in the wake of the U.S.-India nuclear deal. "It's a sunshine
policy toward India," explains a senior official of the Foreign
Ministry.

The International Atomic Energy Agency (IAEA) also endorsed the NSG
decision, because the IAEA thought it would be better to inspect at
least commercial nuclear facilities and expand the network of
supervision for nuclear nonproliferation instead of leaving India
outside the nonproliferation regime. Nuclear development is under
way in such countries as Iran and Pakistan, so the IAEA thought it
would be effective to involve India in order to sew up one tear in
the nonproliferation regime.

In addition, given the exhaustion of petroleum and the progress of
global warming, the IAEA also thought it would be better to let
India build more nuclear power plants instead of having it
mass-consume fossil fuels. The United States and some other

TOKYO 00002978 009 OF 013

countries want India to become a power strong enough to vie with
China. If India grows into a huge nuclear market, there will be
business chances. This is why such countries as France are following
the United States.

Japan is the only atomic-bombed nation. The NSG's acceptance itself
was therefore a tough choice for Japan. If Japan enters into an
agreement with India at this point, such a course of action would
face a strong backlash from the public.

However, the government is also beginning to think it would be in
the medium- and long-term interests of Japan to conclude an
agreement and cooperate with India.

Meanwhile, the sunshine policy is having more repercussions.
Pakistan announced in the middle of this month that it had reached
an agreement with China on bilateral cooperation on building nuclear
power plants. Obviously, this is a response tot the U.S.-India deal.
Pakistan is not an NPT signatory and was a black-market player.

The NPT Review Conference is scheduled to take place in two years.
Ahead of this event, Iran, which is an NPT signatory, would also cry
out against that move.

There are some doubts about India as well. Michael Krepon, a U.S.
expert on nuclear disarmament and nonproliferation, notes that
India's nuclear test in 1998 yielded an insufficient result. Krepon
presumes that India would need to conduct another nuclear test. He
criticized the U.S.-India nuclear pact, claiming that it remains
vague about India resuming nuclear testing. "If Japan is going to
push for nuclear cooperation with India," he added, "that should be
preconditioned on signing the Comprehensive Nuclear Test Ban Treaty
(CTBT)."

Of course, it would be difficult to persuade India to sign the CTBT,
which the United States has yet to ratify. However, the United
States could change its response to the CTBT if the Democratic Party
takes office and calls the shots in Congress. Japan should endeavor
to shape international public opinion. At the same time, Japan
should try every possible means and tenaciously push ahead with
nuclear disarmament and nonproliferation dialogue with India.

(7) NPT at greater risk due to U.S.-India nuclear agreement; Japan
must take initiative in nuclear nonproliferation

MAINICHI (Page 4) (Abridged slightly)
October 23, 2008

By Takuji Nakao, Vienna office

A nuclear embargo against India, which has conducted nuclear weapons
tests, was lifted last month for the first time in over 30 years.
India, which is not a party to the Nuclear Nonproliferation Treaty
(NPT), is now allowed to import atomic power technology and nuclear
fuel. Given the fact that no questions were raised about its
possession of nuclear weapons, this is tantamount to India being
recognized as a nuclear power by the international community. I
believe the NPT is indeed in crisis. This might end up dampening the
motivation of countries making serious efforts in nuclear
nonproliferation and making North Korea and Iran -- countries
suspected to have nuclear weapons programs - even more arrogant. As
the world's only atomic-bombed country, Japan should play an active

TOKYO 00002978 010 OF 013

role in maintaining the NPT regime.

The latest series of developments was triggered by the United
States. In 2005, the United States began talks with India on a
bilateral nuclear agreement aimed at nuclear trade with that
country. The pact was signed on Oct. 10 and immediately came into
effect. Behind the move is the eagerness of American companies to do
nuclear business with India. The Bush administration kept pushing
the Congress for speedy deliberations in order to ratify the pact
before it leaves office in January 2009. As if to vie with the
United States, France, too, inked a nuclear pact with India last
month. Russia is also conducting talks with India.

To the United States, the largest obstacle was the Nuclear Suppliers
Group (NSG, with a membership of 45 countries, including Japan) that
regulates nuclear exports. Established in response to a nuclear test
carried out by India in 1974, the NSG is a framework that regulates
nuclear trade in order to prevent nuclear proliferation. NSG members
met in September in Vienna. Their discussion on the second day of
the meeting lasted until 2 o'clock in the morning, an unusual case.

In the session, such countries as Australia and New Zealand demanded
India's assurance that it would not conduct nuclear tests. Calling
representatives of countries opposing (an NSG waiver) into a
separate room, the United States pressed them, asking, "Should
India, a country with a population of 1 billion, be left as is?" The
countries cautious about such a decision were steamrollered by the
United States, and Japan failed to stop it. On Sept. 6, the NSG
finally decided to allow a waiver for India, a non-NPT signatory,
opening the door for its members to export nuclear fuel and
technology to that country.

What is particularly troublesome is that the imports of nuclear fuel
for civilian-sector nuclear power generation would make it possible
for India to use home-grown natural uranium to produce nuclear
weapons. An anti-waiver country predicted that the measure would
increase India's capability to produce nuclear weapons from the
current level of seven to 40 to 50 a year. The International Atomic
Energy Agency (IAEA) Board of Governors approved in August India's
nuclear inspection agreement with the nuclear watchdog. India is
expected to agree to open only 14 out of 22 nuclear facilities to
the IAEA.

Meanwhile, the NPT is calling for the efforts of the five nuclear
powers (United States, Russia, Britain, France, and China) for
nuclear disarmament. India has only announced the continuation of
its moratorium on nuclear testing. The United States explained that
India, the world's largest democracy, would join the mainstream of
nuclear nonproliferation. It can be said that the NPT effectively
confirmed the possession of nuclear weapons of India, a non-NPT
state.

Japan's response was problematical, as well. Throughout the NSG
negotiations, Japan exhibited an ambiguous attitude, with then Chief
Cabinet Secretary Nobutaka Machimura saying, "We will judge it
comprehensively." True, a shift from coal-fired power generation to
atomic power generation can contribute to containing global warming,
as was asserted by Japan. But that does not mean nuclear
nonproliferation can wait on the sidelines.

India's credibility could be called into question, as well. The
Institute for Science and International Security, a U.S.

TOKYO 00002978 011 OF 013

private-sector think tank, has shed light on the Indian government's
lax business practices that include its disclosing of the designs
for uranium-enrichment centrifuges to bidders. The Institute has
pointed out, "The management of nuclear data is unbelievably
sloppy."

Such questions all concern the basic issue of nuclear
nonproliferation. But which country should be the one to give candid
advice to the world's sole superpower, the United States, which has
made a clear distinction in its response between India, its ally,
and Iran and North Korea, the "rogue states." That role should be
played by Japan, whose national policy is to eliminate nuclear
weapons. It is necessary to give advice even to the United States
when the NPT regime is shaking.

The NPT regime, which is reviewed every five years, is at a
crossroads. Now that the waiver for India has been adopted, the NPT
review conference to be held in New York in 2010 is likely to fall
into confusion.

At this conjuncture, Yukiya Amano, ambassador to the Permanent
Mission of Japan to the International Organizations in Vienna, has
decided to run to become the next IAEA secretary general (beginning
in December 2009). I believe Japan's leadership and comprehensive
ability in nuclear nonproliferation is now being tested.

(8) TOP HEADLINES

Asahi:
Aso instructs ruling parties to study raising consumption tax

Mainichi:
Government estimates consumption tax hike up to 15.5 PERCENT
necessary

Yomiuri:
Maximum 94 trillion yen seen necessary for medical, care costs in
fiscal 2025

Nikkei:
Japan, U.S., Europe to move to set up mechanisms for disposing of
losses at financial institutions

Sankei: Tokyo Shimbun:
Woman sickened by Cup Noodle soup: Nisshin to recall 500,000 cups

Akahata:
Grand coalition between LDP and DPJ will destroy Constitution, says
Chairperson Shii

(9) EDITORIALS

Asahi:
(1) ASEM heavily responsible for making effort to put end to
financial crisis:
(2) Estimate for medical cost: Show road map to increased burden

Mainichi:
(1) Prime minister's night meetings: Self-awareness as public
official questioned
(2) Estimate for medical, and care costs: Reform scenario without
words

TOKYO 00002978 012 OF 013

Yomiuri:
(1) Medical services, nursing care, pensions: We want to see deeper
discussions
(2) Death of MSDF member during exercise: Correct bad habits and
proclivity

Nikkei:
(1) Take economic effects, instead of election into account, when
mapping out additional economic stimulus package
(2) Emergency medical service system that can give peace of mind
needed

Sankei:
(1) Hospitals refuse to accept pregnant woman: Improve emergency
system
(2) Easing market-value accounting system: Effort needed to secure
transparency

Tokyo Shimbun:
(1) Medical and nursing care cost: Improve the system to live up to
increased burden
(2) Drowning of inmate: Situation in prisons is still unknown

Akahata:
(1) It has been 80 years since the Great Depression: Make most of
the lessons learned from history

(10) Prime Minister's schedule, October 23

NIKKEI (Page 2) (Full)
October 24, 2008

07:31
Took a walk around his private residence in Kamiyama-cho.

11:02
Met at the Kantei with participants in the Ship for Southeast Asian
Youth Program and others.

11:49
Met Foreign Ministry's Vice Minister Yabunaka, Deputy Foreign
Minister Sasae, and Economic Affairs Bureau Director General Otabe.
Yabunaka and Sasae stayed behind. Joined by Asian and Oceanian
Affairs Bureau Director General Saiki.

13:46
Attended a garden party at the Imperial Garden.

15:25
Met Foreign Minister Nakasone and Finance Minister Nakagawa at the
Kantei. Followed by LDP Tax Commission Chairman Tsushima.

16:10
Met Foreign Ministry's Sasae, Saiki, Vice Minister of Finance for
International Affairs Shinohara, and METI Deputy Vice Minister
Ishige, with Deputy Chief Cabinet Secretary Matsumoto present.

16:42
Met Toyama Governor Ishii.

17:32

TOKYO 00002978 013 OF 013

Met Japan Credit Rating Agency President Utsumi. Followed by LDP
Policy Research Council Chairman Hori, New Komeito Policy Research
Council Chairman Yamaguchi, Project Team on Global Financial Crisis
Chairman Yanagisawa, Economic and Fiscal Policy Minister Yosano, and
others.

20:23
Let Haneda Airport by a government plan for the ASEM summit.

Night
Arrived at the international airport in Beijing. Stayed at a hotel.

SCHIEFFER

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