Cablegate: Japanese Morning Press Highlights 01/14/10

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UNCLAS SECTION 01 OF 09 TOKYO 000079

SIPDIS

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 01/14/10

INDEX:

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

Okada-Clinton summit:
4) Differences on Futenma, China (Yomiuri)
5) No clear path to Futenma resolution (Nikkei)
6) Clinton criticizes Japan's subsidy system for eco car (Sankei)
7) Summary of Japan-U.S foreign ministers' meeting and press
conference (Yomiuri)

Foreign relations:
8) Communist Party leader Shii hopes for friendship with U.S.
(Yomiuri)

Defense & security:
9) Indian Ocean refueling mission ends tomorrow (Yomiuri)

Economy:
10) Bankruptcies reach record high since 2001 (Yomiuri)
11) Preparatory meeting for trilateral FTA scheduled for 26th
(Nikkei)
12) Inamori agrees to head JAL (Nikkei)

Politics:
13) Prosecutors search Ozawa fund organization office (Yomiuri)
14) PNP proposes two plans for postal business management (Yomiuri)

Articles:

1) TOP HEADLINES

Asahi: Mainichi: Yomiuri: Nikkei: Sankei: Tokyo Shimbun
Prosecutors search Democratic Party of Japan Secretary General
Ozawa's office and other locations to determine flow of money for
land purchase by his fund management organization

Akahata:
Search together with the people for a new politics: 25th Congress of
Japan Communist Party starts amid tumultuous political situation

2) EDITORIALS

Asahi:
(1) Japan-U.S. alliance talks: Hold discussions to strengthen
foundation
(2) Gender identity disorder: Justice Minister Chiba makes
reasonable decision

Mainichi:
(1) Japan-U.S. foreign ministerial talks: Settling Futenma
relocation issue is now public pledge
(2) Turning political leadership into legislation: Promptly make up
for the delay

Yomiuri:
(1) Public prosecutors launch investigation into Ozawa's office:
Speed up efforts to get to the bottom of the land deal involving
him

TOKYO 00000079 002 OF 009

(2) Japan-U.S. foreign ministerial: Futenma issue must first be
settled to deepen alliance

Nikkei:
(1) When will Mr. Ozawa give an explanation of the land deal?
(2) At a minimum Japanese, U.S. foreign ministers sought to
stabilize relationship

Sankei:
(1) Investigation into Rikuzan-kai, DPJ Secretary General Ozawa's
fund management body: Ozawa's political responsibility is clear; we
want a thorough investigation into dubious land transaction

Tokyo Shimbun:
(1) Japan-U.S. alliance talks: Aim at deepening alliance beyond
military front
(2) Investors increasingly abandoning JAL: Speed up efforts to
eradicate anxieties felt at home and abroad

Akahata:
(1) Land purchase fund scandal: Ozawa owes the people an
explanation

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, January 13

NIKKEI (Page 2) (Full)
January 14, 2010

10:01 Received a salute from an honor guard at the Defense Ministry.
Met with Defense Minister Kitazawa and others. Attended a meeting of
the association of senior SDF members.
11:08 Met Deputy Chief Cabinet Secretary Matsuno at the Prime
Minister's Official Residence.
14:00 Met participants in the "World Youth Ship" project and others.
Later met incoming and outgoing superintendent general of the
Metropolitan Police Department Ikeda and Yonemura.
15:02 Met National Strategy Minister Sengoku and Cabinet Office
Senior Vice Minister Furukawa. Joined by Deputy Chief Cabinet
Secretary Matsui.
16:14 Met Transport Minister Maehara. Followed by Finance Minister
Kan. Joined by Kyocera Honorary Chairman Kazuo Inamori and Maehara;
Chief Cabinet Secretary Hirano also present. Kan and Maehara stayed
behind.
18:35 Attended a gathering of the association of senior SDF
officials.
19:31 Arrived at his official residential quarters.

4) Okada, Clinton remain far apart over Futenma and China; future of
talks to deepen bilateral alliance remains unclear

YOMIURI (Page 2) (Full)
January 14, 2010

Satoshi Ogawa, Chikara Shima, Honolulu

At a foreign ministerial meeting held on Jan. 12 (Jan. 13, Japan
time), the governments of Japan and the United States agreed to
begin talks on deepening the bilateral alliance on the occasion of
the 50th anniversary of the revision of the Japan-U.S. Security
Treaty. Nevertheless, the gap in perceptions of China's economic

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growth and military buildup, in addition to the rift over the issue
of relocating the U.S. Marine Corps' Futenma Air Station in Okinawa,
is often mentioned. The future course of the envisaged talks remains
to be seen.

"Unless Japan and the United States share common perceptions, we
will not be able to come up with what must be done next," Foreign
Minister Katsuya Okada said about the security situation in China at
a press conference after the meeting on Jan. 12.

Security officials in Japan and the United States share the view
that the threat of China is growing stronger in East Asia. The
United States is concerned about that common perception even though
it was rarely concerned about it during the period when the Liberal
Democratic Party was in power. This concern comes from the Hatoyama
administration's tilt toward China. Last December when Japan-U.S.
relations were tense, some 140 Democratic Party of Japan lawmakers
visited China.

In the talks on deepening the bilateral alliance, Japan and the
United States are likely to focus on sharing the same perceptions of
the situation on a political level.

The Hatoyama administration is expected to propose a review of the
Japan-U.S. Status of Forces Agreement and other matters, but chances
appear slim for Washington to respond positively unless the Futenma
is settled. The two countries might end up working toward different
objectives.

The Obama administration is also struggling with how to deal with
Japan. At the meeting, Secretary of State Hillary Clinton strongly
urged Okada to settle the Futenma issue at an early date by
implementing the existing relocation plan. In a press conference
that followed the meeting, an American journalist indicated that the
U.S. side might have failed to obtain a promise from Japan to abide
by the bilateral agreement on Futenma. In response, the Secretary
simply said: "We are aware of the problems (the Hatoyama
administration) is facing."

The fact that the meeting took place in Hawaii, not in Washington,
seems to show Washington's puzzlement as well. "The American media
are becoming increasingly interested in deteriorating U.S.-Japan
relations," a U.S. government source explained. "We chose Hawaii
because it is far away from Washington where the media outlets are
concentrated."

5) Prospects for Futenma issue remain unclear after Okada-Clinton
talks; conflict avoided by agreeing to start talks on deepening
alliance

NIKKEI (Page 2) (Full)
January 14, 2010

Nahoko Yamauchi in Honolulu

The Japan-U.S. foreign ministerial talks held on the morning of Jan.
12 (before dawn on Jan. 13, Japan time) made no progress on the
issue of the relocation of the Futenma Air Station in Okinawa. On
the other hand, the two sides agreed on starting talks on deepening
the alliance on the occasion of the 50th anniversary of the revision
of the Japan-U.S. security treaty. The alliance talks are meant to
be a "clamp" (to hold the alliance together) in order to avoid

TOKYO 00000079 004 OF 009

conflict, but the scenario for the Japanese side's reaching a
solution to the Futenma issue by May remains unclear.

Secretary Hillary Clinton pressed again for Futenma's relocation to
the coastal area of Camp Schwab at her talks with Foreign Minister
Katsuya Okada, saying: "The conclusion reached in the current U.S.
Forces Japan (USFJ) realignment road map is the result of a long
process." While the Obama administration had agreed to holding the
foreign ministerial meeting, its position remains unchanged.

Various relocation proposals have come up on the Japanese side in
the past but they were rejected. They included a plan to integrate
the Futenma base with the Kadena Air Base and relocation to Ie
Island. A U.S. government source asserted that "the reexamination of
these proposals would not take more than two weeks," indicating that
the U.S. side will continue to demand an early solution before May.

The White House is also concerned about criticism of Japan in
Congress. The chairpersons of the House of Representatives Foreign
Affairs and Armed Services Committees sent a letter to Prime
Minister Yukio Hatoyama in early January, asking for the early
implementation of the USFJ realignment plans. In case of a setback
in the relocation of 8,000 U.S. Marines in Okinawa to Guam, this
will also affect base construction work in Guam.

A gap also exists on the talks to deepen the alliance. The U.S. side
has its eyes on the volatile U.S.-China relationship, including such
issues as arms sales to Taiwan. On her way to Hawaii, Clinton talked
about the importance of China to reporters on the plane, saying: "We
hope for a mature U.S.-China relationship that does not become
derailed even when there are differences." Without China, the top
buyer of U.S. government bonds, America cannot rehabilitate its
economy.

However, adopting too weak a stance will tip the balance in
relations with China, which is expanding militarily. The Obama
administration looks to Japan and Australia to serve as a restraint
on China. It appears that the advice of Harvard University's
Professor Joseph Nye that "ignoring Japan is undesirable
strategically" led to the policy shift this time.

The U.S.'s goal in the alliance talks is to expand the scope of the
Japan-U.S. security treaty to the whole world, in order to contain
international terrorism, while the Hatoyama administration's image
of the alliance is unclear. In the end, there can be no progress in
the alliance talks without building a relationship of trust in the
Futenma relocation issue.

Timetable of forthcoming events relating to Japan-U.S. relations

Jan. 19 Joint statement on 50th anniversary of security treaty
revision
Jan. 24 Nago mayoral election
January Three ruling coalition parties to submit new proposals on
Futenma relocation site
May Decision on new relocation plan
First half of 2010 Meeting of Japanese, U.S. cabinet ministers in
charge of foreign affairs, defense (two-plus-two)
July House of Councillors election
November Okinawa gubernatorial election
President Obama visits Japan for APEC Summit

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6) Secretary of State Clinton: Japan's eco-car promotion program
"exclusive"

SANKEI (Page 1) (Excerpts)
January 14, 2010

Hiroyuki Kano, Honolulu

During her talks with Foreign Minister Katsuya Okada on the morning
of Jan. 12 (early morning of Jan. 13, Japan time), U.S. Secretary of
State Hillary Rodham Clinton stated on the Japanese government's
program of offering tax breaks on purchase of eco-friendly cars:
"There is growing concern in U.S. Congress that the program is
exclusive," expressing the U.S. side's displeasure that the program
excludes American automobiles. She called on Okada to give
consideration to the dissatisfaction with the program in the United
States. The two top Japanese and U.S. diplomats agreed to maintain
close contact in the future. Last December U.S. Trade Representative
(USTR) made a request to the Ministry of Economy, Trade, and
Industry (METI) that the system be changed. In addition, U.S.
Congressman Betty Sutton (Democrat) submitted a resolution to
Congress on Jan. 6 saying Japan's eco-car program is unfair to
American automobile manufacturers.

Japan-U.S. economic relations might become strained, auto companies
concerned about possible foreign pressure

Kosei Watanabe, Hirohiko Yamaguchi, Detroit

Secretary Clinton expressed concern about Japan's eco-car program,
saying "It is exclusive." This fact implies the possibility that the
strain in the bilateral alliance caused by Tokyo's handling of the
relocation of U.S. Marine Corps Air Station Futenma is gradually
spreading to the trade area. While building momentum, U.S. Congress
is certain to demand that Japan change the program. As a result, the
Japanese government will likely be forced to respond in some way.
However, if the program is applied to import cars, it will have an
impact on the sales of Japanese auto makers, which are beginning to
recover by taking advantage of the eco-car promotion program.

A Japanese auto-manufacturing industry official commented on the
U.S. side's concern: "The system was not made to discriminate on the
basis of auto companies' nationalities." However, it is certain that
the eco-car promotion program has become a driving force for the new
car sales of Japanese automakers.

The sales of new Japanese cars for 2009 dropped 10 percent, compared
with those of 2008, gradually recovering the reduction percentage.
However, the sales of import cars declined 20 percent. The eco-car
program does not apply to most import cars. Import car companies
pointed out that the program is puts foreign automakers at a
disadvantage, because they give priority to high-speed operation
whereas Japan's fuel gasoline consumption standards attach
importance to low-speed operation.

Some have contended that it is difficult to compare between the
sales of Japanese cars and American cars, because most of the
Japanese cars sold in the United States are produced in the U.S. and
the number of those cars that are exported is small. However,
Clinton's remarks were apparently aimed at using the eco-car program
to exert "foreign pressure or gaiatsu" on the Hatoyama
administration, or as a sort of tool for "Japan-bashing" (diplomatic

TOKYO 00000079 006 OF 009

source).

However, if the eco-car program is applied to import cars due to
"foreign pressure," it will have a negative impact on the rising
tide of Japanese companies, which have been revising their
performance upward.

7) Gist of Okada-Clinton talks and their joint news conference

YOMIURI (Page 4) (Full)
January 14, 2010

Following is the gist of the Japan-U.S. foreign ministerial talks
and the joint news conference held after the meeting:

Foreign ministerial talks

Japan-U.S. alliance

Okada: This year marks the 50th anniversary of the revision of the
Japan-U.S. security treaty. We will cooperate to further deepen the
Japan-U.S. alliance in a manner appropriate for the 21st century.

(The two sides agreed to issue a joint statement by the Japanese and
U.S. cabinet ministers in charge of foreign affairs and defense on
Jan. 19, the 50th anniversary, and to hold a meeting of the
Japan-U.S. Security Consultative Committee in the first half of this
year.)

Okada: I would like to suggest the issuing of a new document to
replace the 1996 Japan-U.S. Joint Declaration on Security, in which
the leaders of the two countries redefined the security alliance.

Futenma relocation

Okada: The ruling coalition parties have begun the examination
process. Both Prime Minister Hatoyama and I are saying that we will
reach a conclusion by May.

Clinton: The conclusion reached (in the current relocation plan) is
the result of a very long process. It is the best option.

Investigation of secret agreements

Okada: (The investigation) must not have an adverse effect on the
operation of the Japan-U.S. security arrangements. We will keep in
close contact.

North Korea

Clinton: It is important to push for the resumption of the Six-Party
Talks.

Okada: North Korea is saying that negotiations on a peace treaty
should take place. We are concerned that this may just be a delaying
tactic.

Joint news conference

Futenma relocation

Clinton: We hope that (Japan) will keep its promises (on U.S. Forces

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Japan realignment,) including Futenma relocation. We respect the
procedures the Japanese government is undertaking to reach a
solution, but our position remains unchanged.

Okada: We will come up with a proper conclusion by May and minimize
the impact on the Japan-U.S. alliance. It is not true that other
discussions cannot take place just because there is the Futenma
issue.

Talks to deepen the alliance

Okada: We will start talks to ensure that Japan and the U.S. share a
common understanding of the security environment in Asia and the
Pacific. One issue is how to view China.

8) Shii: JCP hopes for friendship with U.S.

YOMIURI (Page 4) (Abridged)
January 14, 2010

The Japanese Communist Party kicked off its 25th congress yesterday
in Atami, Shizuoka Prefecture. JCP Presidium Chairman Shii, in his
Central Committee report, referred to relations with the United
States and expressed his hope for a better relationship with the
United States. "We hope for a genuine friendship with the United
States," Shii said. It is unusual for the JCP leader to show a
positive stance of trying to move the party's relations with the
United States forward. The JCP has changed its usual out-and-out
stance of criticizing the United States since U.S. President Obama,
who has advocated eliminating nuclear weapons, was sworn in. The JCP
is aiming to give shape to its policy switchover to a "realistic,
flexible policy line." Given this, Shii apparently intends to
realize this changeover.

In his keynote speech at the party congress, Shii gave high marks to
Obama's advocacy of nuclear elimination in his Prague speech
delivered in April last year. "It's a welcome, forward-looking
change," Shii said.

On the other hand, Shii also emphasized the necessity of revising
the Japan-U.S. Status of Forces Agreement and ensuring the safety of
U.S. military bases in Japan in order for the JCP to build a
friendship with the United States. "The U.S. government does not
appear to be changing its hegemonic control of Japan," Shii said,
adding: "This is a far cry from what the president calls an 'equal
partner,' and the fact is that Japan remains subservient (to the
U.S.)."

9) MSDF mission in Indian Ocean to end tomorrow

YOMIURI (Page 2) (Full)
January 14, 2010

The Maritime Self-Defense Force is currently operating in the Indian
Ocean, where its ships have been engaged in refueling activities
under a newly enacted law for special antiterror measures. This
special measures law, however, will expire tomorrow. The MSDF will
wind up its refueling mission in the Indian Ocean and recall its
vessels there.

In the wake of the simultaneous terror attacks against the United
States in September 2001, Japan began in the Indian Ocean refueling

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activities in support of foreign naval vessels engaged in antiterror
operations. The MSDF refueling mission, though once temporarily
suspended, has continued for about eight years

10) Bankruptcies reach highest number ever recorded since 2001:
Cases ascribable to recession top 80 percent in 2009

YOMIURI (Page 4) (Full)
January 14, 2010

Teikoku Databank, a private research company, on Jan. 13 reported
that the number of corporate bankruptcies (with liabilities worth
over 10 million yen) in 2009 reached 13,306, up 4.9 percent from the
previous year, marking the third consecutive increase. This figure
is the largest since 2001, when comparable data became available.
Total debt came to 6.8101 trillion yen, down 42.8 percent from the
preceding year.

Large-scale bankruptcies, which occurred in succession right after
the financial crisis in the fall of 2008, decreased last year, while
small-size bankruptcies increased. Recession-type bankruptcies
marked the highest-ever level, commanding 81.4 percent of all
bankruptcies. Breaking down the bankruptcies according to business
types, those in the manufacturing sector jumped to 2,084, up 21.9
percent from the previous year.

Meanwhile, the number of bankruptcies in 2009 as reported by Tokyo
Shoko Research on the 13th stood at 15,480, down 1.06 percent from
the previous year, falling below the preceding year's level for the
first time in four years. The figure is the 19th highest since 1952,
when the company started tallying the number of bankruptcies.
Teikoku Databank counts cases that underwent legal liquidation,
while Tokyo Shoko Research counts cases including discretionary
liquidation, such as suspension of bank transactions.

11) FTA preparatory meeting on the 26th

NIKKEI (Page 5) (Full)
January 14, 2010

The Ministry of Foreign Affairs and Trade of South Korea on Jan. 13
revealed that it will hold a bureau-director-general-level
preparatory meeting of Japan, China and South Korea in Seoul on the
26th to pave the way for a free trade agreement among the three
countries. The three countries had earlier agreed at such settings
as summit talks in October last year, etc. that their governments
take part in FTA studies promoted at the private sector-level and
get down to preparations in the first half of this year.

12) Kyocera Chairman Inamori to become new JAL CEO

NIKKEI (Page 1) (Excerpt)
January 14, 2010

It was decided yesterday that Kyocera Corp. Honorary Chairman Kazuo
Inamori will head struggling Japan Airlines Corp. as chief executive
officer (CEO). He accepted the offer presented by the Enterprise
Turnaround Initiative Corporation of Japan and the government. He
will work for three or four days a week because of his advanced age
and receive no pay. Although he has never worked in the transport
industry, the turnaround body and the government pin hopes on the
business skills of Inamori, focusing on the fact that he built

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Kyocera Corp. into a world-class company.

13) Prosecutors search Ozawa-linked organizations

YOMIURI (Top play) (Excerpt)
January 14, 2010

The Tokyo District Public Prosecutors Office's special investigation
team searched yesterday afternoon several offices in connection with
a case in which Rikuzan-kai, the political fund management
organization of Democratic Party of Japan (DPJ) Secretary General
Ichiro Ozawa, failed to enter in its political funding report the
money paid for the purchase of land in 2004. The places searched
included the office of DPJ House of Representatives member Tomohiro
Ishikawa, 36, who handled clerical work at Rikuzan-kai, the Diet
members office building (in Chiyoda Ward, Tokyo), and the
headquarters of the major general contractor Kajima (in Minato Ward,
Tokyo). The prosecutors deemed it necessary to search the offices
for evidence after Ozawa failed to adequately respond to a request
by the investigation unit to submit to voluntary questioning over
the case to find out how the money, 400 million yen, was raised for
the purchase of the land.

14) PNP presents two ideas about management structure of postal
group

YOMIURI (Page 4) (Excerpts)
January 14, 2010

The People's New Party (PNP) yesterday revealed its plan for
reforming the Japan Post Group, including its management structure,
prior to the start of work to draft a postal reform basic bill
(tentative name) the government plans to submit to the upcoming
ordinary Diet session. The PNP plan includes two ideas about the
structure of the business management of the group: One is a
one-company system that would integrate Japan Post Service Co.,
Japan Post Network Co., Japan Post Bank Co., Japan Post Insurance
Co., and their holding company, Japan Post Holdings Co. Another is a
three-company system in which Japan Post Bank and Japan Post
Insurance would be placed under a holding company to be formed by
integrating Japan Post Holdings, Japan Post Service, and Japan Post
Network.

In either case, the government intends to hold more than two thirds
of the shares in the integrated companies and the holding company in
order to place their management under its control. It also plans to
sell the remaining shares to local governments on a priority basis.

ZUMWALT

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