Cablegate: Japanese Morning Press Highlights 12/04/08

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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 12/04/08

Index:

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

Fiscal policy switch:
4) Gov't veering away from fiscal reconstruction (Yomiuri)
5) Gov't cites international cooperation to get over financial
crisis as reason for fiscal policy changeover (Yomiuri)

Convention on Cluster Munitions:
6) Cluster bomb ban inked in Oslo by about 90 countries, including
Japan (Mainichi)
7) U.S., Russia, China sit out (Sankei)

8) Prime Minister Aso says Japan will work on U.S., China to join
cluster bomb ban (Mainichi)

9) Gov't to budget alternative ordnance (Yomiuri)

North Korea problem:
10) U.S., Japan, ROK band together, but still differ on how to
verify North Korea's nuclear declaration (Tokyo Shimbun)
11) Pyongyang reportedly to enter 2nd phase "by March next year" to
abandon nuclear program (Nikkei)

Defense & security agenda:
12) House panel likely to approve MSDF refueling extension bill on
Dec. 16 (Asahi)
13) Base-hosting governors meet with USG, GOJ officials over U.S.
military presence, seek to mitigate burden (Mainichi)

Global warming:
14) Japan to buy CO2 emission rights for 700 billion yen (Mainichi)

Agricultural topics:

15) MAFF to liberalize farmland lease for businesses (Asahi) 10

Articles:

1) TOP HEADLINES

Asahi, Yomiuri & Tokyo Shimbun:
Government sets budget principles, shelving spending cut policy

Mainichi:
Japan and some 90 countries sign treaty banning cluster bombs

Nikkei:
Nippon Oil, Nippon Mining to merge, creating world's 8th-largest
petroleum firm

Sankei:
Big Three seek 3.2 trillion yen for bailout; GM in serious
situation

Akahata:
Isuzu's non-permanent workers form union

2) EDITORIALS

TOKYO 00003305 002 OF 008

Asahi:
(1) Shift in spending cut policy: Fiscal discipline necessary to
overcome crisis

Mainichi:
(1) Government should give more consideration to welfare and
employment issues
(2) Promise to free up revenues from road-related tax a lie?

Yomiuri:
(1) State budget for FY2009: Need to pay careful attention to
economy and employment
(2) Turmoil in Thailand: Find ways to ease political unrest

Nikkei:
(1) In order to revitalize economy, expenditures should be expanded
(2) Bailout plan for Big Three appropriate?

Sankei:
(1) Budget compilation: Maintain fiscal discipline
(2) State control: Recommendations should be completely implemented

Tokyo Shimbun:
(1) Shelving spending cut policy without debate unacceptable
(2) Japan should learn lesson from Big Three

Akahata:
(1) Need for substantial change in "big-boned" economic and fiscal
policy

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, December 3

NIKKEI (Page 2) (Full)
December 4, 2008

07:58
Met with LDP Tax System Research Commission Chairman Tsushima,
Subcommittee Chairman Yanagisawa and advisors Noda, Machimura and
Ibuki.

10:22
Met with Chugoku Economic Federation Chairman Fukuda at the Kantei.

11:10
Met with former Chinese Foreign Minister Li Zhaoxing, followed by
Ashikaga Mayor Yoshitani and others. Then met with Utsunomiya Mayor
Sato.

12:03
Award ceremony for persons of merit for promoting barrier-free
universal design.

14:14
Met with Deputy Chief Cabinet Secretary Konoike, followed by Lower
House member Jiro Akama. Then met with special advisor to party
president Shimamura and Public Relations Headquarters chief Furuya.

15:17
Met with Cabinet Intelligence Director Mitani, followed by National

TOKYO 00003305 003 OF 008

Chamber of Agriculture President Ota and other. LDP Agricultural and
Marine Product Research Commission Chairman Futa and Upper House
member Kishi were present. Then met with Fukuoka Chapter Chairman
Kurauchi.

16:15
Met with Deputy Foreign Minister Sasae.

17:03
Council of Economic and Fiscal Policy meeting.

18:42
Special cabinet meeting.

19:07
Met with LDP Policy Research Council Chairman Hori and his New
Komeito counterpart Yamaguchi.

19:37
Met with Diet Affairs Committee Chairman Oshima, Lower House Diet
Steering Committee Chairman Kosaka and Chief Cabinet Secretary
Kawamura and Secretary General Hosoda were present.

21:20
Met with his secretary at a bar in Imperial Hotel.

23:24
Arrived at the private residence in Kamiyamacho.

4) Government decides to shift from spending cut policy

YOMIURI (Top play) (Lead para.)
December 4, 2008

The government at a special cabinet meeting yesterday adopted a
basic policy on the compilation of the fiscal 2009 budget. Regarding
the budget request guidelines for fiscal 2009, which incorporate
constraint on growth in social security spending and a cut in public
works, the basic policy includes the words "maintain the
guidelines," which is weaker than the previous words "firmly
maintain." In readiness for a further decline in the economy, the
basic policy indicates a government stance of increasing public
spending in a flexible manner with the expression that a decisive
response will be made in a timely and flexible way. The government
has thus clearly indicated a stance of giving priority to turning
the economy around instead of implementing fiscal reconstruction, by
effectively switching from the fiscal reconstruction policy line,
which has been in place since 2006 during the Koiuzmi
administration.

5) Government sets budget principles: Policy shift with cooperation
with U.S. and European countries as justification

YOMIURI (Page 9) (Excerpts)
December 4, 2008

The government yesterday adopted a basic policy on the compilation
of the fiscal 2009 budget, in which it included a decision to put
off the fiscal reconstruction policy line. As justification for the
policy switch, the government cited cooperation with the U.S. and
European countries in addressing the financial crisis. Since there
is concern that public spending will increase without principles in

TOKYO 00003305 004 OF 008

areas unrelated to efforts to address the financial crisis, the
government will likely have to reset its guidelines for maintaining
the fiscal discipline.

Later in the day, Prime Minister Aso told reporters, "I will
consider fiscal reconstruction over the medium term. I will focus on
economic stimulus measures for the next three years." He thus denied
the view that the government had shifted from the fiscal
reconstruction policy line. State Minister for Fiscal and Financial
Policy Nakagawa echoed his view: "The government will not abandon
the fiscal discipline. However, it will give consideration to the
economic situations in Japan and the world, as they are beginning to
change."

However, the adopted basic policy gives a strong impression that
priority has been given to economic stimulus measures. The
government has now backpedaled on its consideration for the fiscal
discipline.

Gist of basic policy on fiscal 2009 budget compilation

? There is mounting concern that the downward trend of the Japanese
economy will become protracted and serious.
? Depending on circumstances, a decisive approach should be made in
a timely and flexible way, based on the financial summit
declaration, while maintaining the budget request guidelines for the
fiscal 2009 budget.
? "Peace of mind for people," "strengthening financial and economic
stability" and "demonstration of local potential" should be made key
areas.
? Make efforts to achieve the goal of moving the primary balance of
the central and local governments into the black by fiscal 2011.

6) Some 90 countries, including Japan, sign treaty banning cluster
bombs

MAINICHI (Top play) (Lead paragraph)
December 4, 2008

Katsumi Sawada, Oslo

A signing ceremony for the Convention on Cluster Munitions (Oslo
treaty) banning the use, manufacturing, and possession of cluster
bombs, was held at the Oslo City Hall on Dec. 3. Unexploded bomblets
often cause damage to civilians. The treaty also stipulates support
for victims and the disposal of unexploded bombs. Some 90 countries
are expected to sign the treaty. The pact will come into effect
about half a year after the first 30 countries have ratified it.
Following the Landmine Ban Treaty (that went into effect in 1999),
this is the second pact that will take effect under the initiative
of like-minded countries and nongovernmental organizations (NGOs).
Citizens-led disarmament diplomacy has opened up a new horizon.

7) Some 100 countries, including Japan, sign cluster bomb ban
treaty; U.S, Russia and China not included

SANKEI (Page 2) (Excerpt)
December 4, 2008

Masato Kimura, London

A signing conference for the Convention on Cluster Munitions was

TOKYO 00003305 005 OF 008

held in Oslo on December 3. Damage to civilians by unexploded
bomblets has long been a problem. Some 100 countries, including
Japan, the UK, Germany and France, signed the treaty. Finland, which
borders Russia, did not sign the pact. The absence of such major
producers as the United States, Russia and China also offered a
glimpse into the severe reality of international politics.

8) Aso to urge U.S., China to sign cluster bomb ban treaty

MAINICHI (Page 2) (Full)
December 4, 2008

Keiichi Shirato

Touching on the fact that Japan has signed the cluster munitions ban
treaty, Prime Minister Taro Aso indicated to reporters at the Prime
Minister's Office yesterday that he would urge such countries as the
United States and China to join the treaty. He said: "I would like
to work upon as many non-signatory countries as possible to join the
treaty. This is a historic event."

9) Cluster bomb treaty signed; Government to allocate funds for
alternative weapons in supplementary budget

YOMIURI (Page 2) (Full)
December 4, 2008

The government decided yesterday to include the maintenance cost of
precision-guided bombs replacing cluster bombs in a fiscal 2008
second supplementary budget to be submitted to the next regular Diet
session in January. Approximately 7.3 billion yen is included in the
budgetary request for fiscal 2009. But the government has now
decided to frontload the cost, concluding that in order to maintain
the country's defense capabilities, obtaining alternative weapons is
indispensable.

As alternative weapons, the Defense Ministry has decided to
introduce precision-guided M-31 rockets for a multiple-launch rocket
system and laser JDAM kits for fighters. Their maintenance costs
were included in the fiscal 2009 budgetary request.

10) Japan, U.S., ROK demonstrate solidarity, but gaps remain on how
to verify North Korea's nuclear declaration

TOKYO SHIMBUN (Page 2) (Abridged slightly)
December 4, 2008

Negotiators on North Korea's denuclearization -- Foreign Ministry
Asian and Oceanian Affairs Bureau Director General Akitaka Saiki,
U.S. Assistant Secretary of State Christopher Hill and South Korea's
envoy Kim Sook -- held a meeting yesterday in Tokyo. Ahead of the
next round of the six-party talks slated for Dec. 8, the three
nuclear envoys banded together, but differences appeared in their
positions on how to verify North Korea's nuclear declaration.

In the meeting, the three negotiators agreed to aim at pressing the
North to agree to verify its nuclear disarmament in writing,
including sampling of nuclear materials.

Although sampling is indispensable for verifying the amount of
plutonium, Pyongyang has refused to accept it. The agreement reached
in October between the United States and North Korea is unclear on

TOKYO 00003305 006 OF 008

this point.

The Japanese government, therefore, has strongly demanded that a
deal be put down in writing. The Japanese side appears to have
reminded the Bush administration not to make an easy concession.
After the meeting, Hill softly sought to constrain the Japanese
government, which has insisted on the need for the codification of a
verification protocol. He said: "North Korea's denuclearization is
not the only purpose of the six-party-talks. Another purpose is to
build relations among countries in the region."

South Korea also has called for the codification of a verification
protocol, but its real intention is to resume Inter-Korean dialogue
by taking advantage of progress on the six-party talks.

11) South Korean media report on completion by next March of second
phase of North Korea's denuclearization

NIKKEI (Page 2) (Full)
December 4, 2008

The chief delegates to the six-party talks of Japan, the United
States and South Korea yesterday discussed in Tokyo steps to be
taken at the next round of the six-party talks, which is expected to
begin in Beijing on Dec. 8. They confirmed a policy course to aim at
completing by next March the second-phase measures of the
disablement of nuclear facilities and energy aid for the nuclear
abolition of North Korea.

They also agreed to let other countries take over Japan's share of
aid equivalent to 950,000 tons of heavy fuel oil, which Tokyo has
been refusing to provide due to a lack of progress on the abduction
issue. These developments have been reported by some South Korean
media as accounts from an official of its Foreign Affairs and Trade
Ministry. A senior Japanese Foreign Ministry official has denied
those developments, saying: "Such specifics were not discussed."

The meeting was held among Foreign Ministry Asian and Oceanian
Affairs Bureau Director-General Akitaka Saiki, U.S. Assistant
Secretary of State Christopher Hill, and South Korean Foreign
Affairs and Trade Ministry Korean Peninsula Peace and Security
Affairs Special Representative Kim Sook. They also confirmed the
need to put into writing an effective means to verity the nuclear
programs declared by the North, including the sampling of its
nuclear facilities.

12) Upper House panel to take vote on refueling extension bill on
Dec. 16

ASAHI (Page 4) (Full)
December 4, 2008

Toshimi Kitazawa, chairman of the House of Councillors' Committee on
Foreign Affairs and Defense, proposed yesterday in a committee
meeting taking a vote on a bill amending the new Antiterrorism
Special Measures Law designed to extend by one year the Maritime
Self-Defense Force's refueling mission in the Indian Ocean. The
expectation is that if the ruling and opposition camps can
coordinate a timetable for intensive deliberations on civilian
control, which the opposition bloc has called for, the committee
will put the bill to a vote as early as Dec. 16.

TOKYO 00003305 007 OF 008

13) 14 base-hosting governors meet with Japanese, U.S. government
officials, seek to lighten burden

MAINICHI (Page 5) (Full)
December 4, 2008

The Japanese and U.S. governments held their first three-party
liaison conference at the Foreign Ministry yesterday with
representatives from the governments of 14 prefectures that host
U.S. military bases, including Tokyo and Hokkaido. In the meeting,
local government representatives asked the Japanese and U.S.
governments to lessen their prefectures' base-hosting burden.
Incidents and accidents involving U.S. Forces Japan have been
discussed in an intergovernmental joint committee of Japan and the
United States. However, the 14 base-hosting prefectures, represented
by Kanagawa Gov. Shigefumi Matsuzawa, have asked the Japanese and
U.S. governments to hold a three-party conference for a periodical
exchange of views.

In the meeting, Matsuzawa and other participants took up such issues
as the noise problem of U.S. military bases in Japan and they
insisted that the planned realignment of U.S. forces in Japan-which
reached a bilateral agreement in 2006-should make headway in
accordance with its roadmap.

14) Japan to buy emission rights worth 700 billion yen

MAINICHI (Page 1) (Excerpts)
December 4, 2008

The total amount of emission rights that the government and industry
circles will purchase in order to meet Japan's target of reducing
greenhouse gas emissions promised under the Kyoto Protocol on global
warming was revealed yesterday. Japan will buy carbon emission
rights at least 350 million tons worth approximately 700 billion yen
in international markets. As domestic greenhouse gas emissions have
been on the increase, if Japan fails to cut its emissions, its costs
for emissions trading could increase further.

The decision was reported in a joint meeting yesterday of the
Environment Ministry and the Ministry of Economy, Trade and
Industry. In the breakdown of the 350 million tons, the Federation
of Electric Power Companies of Japan will purchase 190 million tons
and the Japan Iron and Steel Federation 59 million tons. The
government will also purchase about 100 million tons with tax money.
In addition, about ten other industries are now considering buying
emission rights.

15) Agriculture Ministry decides to liberalize lease of farmland to
boost entrance of corporations

ASAHI (Page 7) (Full)
December 4, 2008

The Ministry of Agriculture, Forestry and Fisheries (MAFF) on
December 3 announced a policy of reforming the farmland system
featuring boosting the advance of corporations into the agricultural
sector, by liberalizing, in principle, the lease of farmland. Its
aim is to clarify the separation of the possession of farmland from
the use of such, by amending the Agricultural Land Law enacted in
1954, which stipulates that farmers should own the land. MAFF wants
to submit a bill amending related bills, including the Agricultural

TOKYO 00003305 008 OF 008

Land Law, to the regular Diet session next year. MAFF Minister
Ishiba presented the plan at a meeting of the government's Council
on Economic and Fiscal Policy held the same day.

When companies advance into the agricultural sector, they either
lease farmland or set up an agricultural production corporation,
which can own farmland. However, it is municipalities that decide
whether to carry out the leasing of farmland. They can also
designate farmland to be used in the business. Since farmland in
poor condition has often been offered for such a purpose, business
circles have been calling for improvement.

The guidelines for establishing an agricultural production
corporation limit the ceiling of one company's investment ratio to
10 PERCENT or lower. MAFF plans to ease this limit. It will work
out a specific figure later.

Farmers are exempt from paying the inheritance tax if they inherit
farmland from their parents. MAFF plans to apply this system, even
if inherited farmlands are leased. It will confer on the matter with
the Finance Ministry.

SCHIEFFER

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