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Cablegate: Japanese Morning Press Highlights 02/17/10

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UNCLAS SECTION 01 OF 09 TOKYO 000306

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 02/17/10

INDEX:

1) Top headlines
2) Editorials

Futenma:
3) SDP, PNP put off announcing candidate sites (Asahi)
4) Road to new location for airfield not in sight (Sankei)

Foreign relations:
5) Okada announces Australian trip (Asahi)

Defense & security:
6) Cabinet releases names of members of blue-ribbon panel on
revision of basic defense program (Asahi)
7) Japan's defense industry shrinking (Nikkei)
8) GSDF troops commence work in Haiti (Yomiuri)

Politics:
9) DPJ paving way for the steady destruction of the LDP (Nikkei)

Economy:
10) Gov't making preparations to question whaling ship intruder
(Nikkei)
11) Japan regains top spot as holder of U.S. treasuries (Yomiuri)
12) Finance Minister says price growth of 1 PERCENT desirable
(Mainichi)

Articles:

1) TOP HEADLINES

Asahi, Mainichi, Yomiuri, Sankei, Tokyo Shimbun & Akahata:
Nagashima, Kato win Japan's first medals at Vancouver Olympics

Nikkei:
U.S. government to provide loan guarantees worth about 720 billion
yen for construction of two new nuclear plants for first time in 30
years

2) EDITORIALS

Asahi:
(1) Finance minister's remarks: Lift the taboo on the consumption
tax
(2) Strained U.S.-China relations: Groping for "optimum distance"
begins

Mainichi:
(1) Data on prioritization of public work projects: This is
precisely pork-barreling
(2) Olympic medals: Learn humbly from China, South Korea

Yomiuri:
(1) Bill on political leadership: What is important is not
organization, but substance
(2) Olympic skating: Silver, bronze medals won through lessons
learned from past setbacks

Nikkei:
(1) Confusion over child allowance reflects absence of ideology
(2) Conduct strict examination of mergers of major resources

TOKYO 00000306 002 OF 009


companies

Sankei:
(1) Silver and bronze medals for Japan: Learn from athletes'
aggressiveness, hard work
(2) Remarks on consumption tax: Announce a road map before Upper
House election

Tokyo Shimbun:
(1) Intrusion into whaling vessel: Impose level-headed, impartial
punishment
(2) Fifth anniversary of Centrair airport: Improve convenience by
networking

Akahata:
(1) Signature campaign for eradication of nuclear arms: Now is the
time to unite public opinion against nuclear weapons

3) Discord evident in ruling coalition over Futenma relocation;
presentation of SDP, PNP plans postponed

ASAHI (Page 3) (Excerpts)
February 17, 2010

The three coalition parties decided on Feb. 16 to postpone the
Social Democratic Party (SDP) and the People's New Party's (PNP)
plan to submit their Futenma relocation plans to the government's
Okinawa base issues examination committee on Feb. 17. The Hatoyama
administration is looking into possible relocation sites behind the
scenes. There was concern that even if the two parties presented
their plans, they might be left in limbo.

"If limited plans are unveiled, they will tie up our hands. That is
why we are coordinating in the direction of considering the matter
in a broad framework with other parties," Democratic Party of Japan
Diet Affairs Committee Chairman Kenji Yamaoka explained to visiting
U.S. Senator Jim Webb (of the Democratic Party) in the Diet building
on Feb. 15. The "limited plans" specifically meant what the SDP and
the PNP were considering for the relocation of Futenma.

Yamaoka held talks with Chief Cabinet Secretary Hirofumi Hirano
early on the morning of Feb. 16 after a cabinet meeting. Yamaoka
began mapping out a plan to modify the timetable with Hirano, who
chairs the Okinawa base issue panel of the government and the ruling
coalition.

The Yamaoka-Hirano meeting was followed by a session of the Diet
affairs committee chairmen of the three ruling parties in which the
SDP's Kantoku Teruya said: "It would be better not to present
individual Futenma relocation plans."

Teruya's comment drew fire from Mikio Shimoji of the PNP, which had
decided to propose relocation to the land area of Camp Schwab. The
session ended with Yamaoka's suggestion to push ahead with
coordination among the three ruling parities.

There was a reason for the SDP to hesitate to present its plan. The
government and the ruling coalition had sent a fact-finding mission
to Guam on Feb. 10-11. The mission was told by the Guam side that it
is difficult to accept additional Marines - an answer particularly
hard for the SDP, which regarded Guam as its prime candidate site.


TOKYO 00000306 003 OF 009


SDP head Mizuho Fukushima and Secretary General Yasumasa Shigeno
also insisted, "If we specify any site outside Okinawa, there will
be a backlash from prospective site." But the party's policy chief
Tomoko Abe voiced opposition: "If we do not mention any site outside
Okinawa and Guam is also off the list, our discussion will return to
the starting point of Henoko." Views in the SDP split.

The SDP and the PNP were also out of step with each other. On Feb.
15, the day the media reported on the PNP's Camp Schwab land area
plan, SDP head Fukushima criticized the PNP plan, citing opposition
from Nago Mayor Susumu Inamine. In response, the PNP's Shimoji
assailed Fukushima.

This is a delicate time for the Hatoyama administration which is
aiming to have the fiscal 2010 budget clear the House of
Representatives before the end of February. Discord in the ruling
coalition is likely to provide ammunition to the opposition camp.
That is why the DPJ has decided to serve as a mediator between the
SDP and the PNP.

Nevertheless, there are no prospects for a broad framework that are
acceptable to the three ruling parties.

In a press conference on Feb. 16, Hirano revealed a plan that either
he or Deputy Chief Cabinet Yorihisa Matsuno will present a
relocation plan to the Okinawa base issue panel.

It was the first time that Hirano had explicitly mentioned the
presentation of a plan to the panel. He also emphasized that the
panel is a forum for substantial discussions, not a venue to come up
with an excuse.

Hirano, who seems to have several plans, is studying their
feasibility with a special team set up in the Defense Ministry by
Minister Toshimi Kitazawa. Prime Minister Hatoyama is also
collecting information on the circumstances in the United States and
possible candidate sites by exchanging views with foreign affairs
commentator Yukio Okamoto, former Deputy Vice Foreign Minister
Hitoshi Tanaka, and others who are well versed in the base issue.

"Separate from what has been revealed, we are looking into various
sites," Prime Minister Hatoyama said to the press corps on the night
of Feb. 16. "It will take time to obtain the understanding of the
people, especially in Okinawa, and of the U.S. But we are steadily
conducting studies."

Meanwhile, Okinawa is reacting strongly to media reports on a plan
for relocation to the land area of Camp Schwab. Nago Mayor Inamine
expressed his strong opposition to this plan on Feb. 16, saying, "I
have repeatedly indicated that both the sea-based and land-based
plans are unacceptable. I will continue to adhere to this
position."

4) Disarray in SDP delays ruling parties' submission of Futenma
relocation site proposals; prospects uncertain

SANKEI (Page 2) (Full)
February 17, 2010

Tomoaki Yamada

The three ruling parties, the Democratic Party of Japan (DPJ), the

TOKYO 00000306 004 OF 009


Social Democratic Party (SDP), and the People's New Party (PNP)
decided on Feb. 16 to postpone the submission of each party's
proposals for the relocation site of the U.S. forces' Futenma Air
Station (in Ginowan City, Okinawa) to the government and ruling
parties' "Okinawa base issues examination committee," originally
scheduled for Feb. 17. The main reason is conflict within the SDP.
The DPJ was also worried that the naming of candidate relocation
sites may affect Diet deliberations. There is increasingly serious
turmoil over the relocation issue, with the political motives of
each party coming into the picture.

At the meeting of ruling party Diet Affairs Committee chairmen on
Feb. 16, SDP Diet Affairs Committee chief Kantoku Teruya said: "It
is better not to submit concrete proposals tomorrow." Although PNP
Diet Affairs Committee chief Mikio Shimoji asked: "We have worked
toward submitting proposals on Feb. 17. Why this last minute
postponement?" DPJ Diet Affairs Committee Chairman Kenji Yamaoka cut
short the discussion at that point, saying: "It is better to reach a
consensus first." The decision was thus made to postpone the
submission of proposals.

Subsequently, the three Diet Affairs Committee chiefs met Chief
Cabinet Secretary Hirofumi Hirano at the Prime Minister's Official
Residence and requested the postponement of the committee meeting on
Feb. 17. Hirano decided to meet as scheduled because "there is no
reason not to hold the meeting," but the three parties will not be
submitting their proposals.

With regard to making proposals on the candidate relocation sites,
SDP leader, State Minister for Consumer Affairs and Declining
Birthrate Mizuho Fukushima indicated her reluctance to reveal the
relocation sites outside Okinawa at a party meeting on Feb. 12, on
the grounds that "the SDP will be forcing (Futenma relocation) on
localities all over the country." SDP policy chief Tomoko Abe
refuted her by saying: "(Without naming the candidate sites,) the
Futenma base will remain where it is."

Fukushima also voiced strong opposition when it was reported that
the PNP planned to propose relocation to the inland area of Camp
Schwab (in Nago City, Okinawa). The coordination process fell into
disarray.

Furthermore, the DPJ Okinawa chapter was making moves to come up
with its own proposal. However, the DPJ headquarters is concerned
that the naming of candidate sites may have an adverse effect on the
FY2010 budget deliberations. One senior ruling party official says:
"There is a strong possibility that the ruling parties will make
their relocation site proposals after the budget passes the House of
Representatives."

In addition, since certain locations in northern Kyushu have emerged
within the ruling parties as candidate sites, there is also
considerable concern that this may affect the Nagasaki gubernatorial
election on Feb. 21.

Meanwhile, Prime Minister Yukio Hatoyama made the following comment
on the evening of Feb. 16 on the delay in submitting the proposals:
"There are various ideas within the ruling parties. I don't think
this will affect in any way the schedule to reach a solution by
May." He stressed that the postponement will not have any impact on
the plan to make a decision by the end of May.


TOKYO 00000306 005 OF 009


Locations, facilities cited as candidate Futenma relocation sites:

Eastern part of Tomokamai (Hokkaido)
Higashi-Fuji training area (Shizuoka Prefecture)
Shizuoka Airport (Shizuoka Prefecture)
Kansai International Airport (Osaka)
Saga Airport (Saga Prefecture)
Maritime Self-Defense Force's Omura air base (Nagasaki Prefecture)
Tokunoshima (Kagoshima Prefecture)
Mageshima (Kagoshima Prefecture)
Iejima (Okinawa Prefecture)
Coastal area of Henoko (Okinawa Prefecture)
Land area of Henoko (Okinawa Prefecture)
Iwo Jima (Tokyo)
U.S. forces' Kadena Air Base (Okinawa Prefecture)
Shimojishima (Okinawa Prefecture)
Guam (U.S. territory)
Saipan, Tinian (U.S. territory)

5) Foreign Minister Okada announces Australia visit

ASAHI (Page 4) (Full)
February 17, 2010

Foreign Minister Katsuya Okada announced yesterday that he plans to
visit Australia on Feb. 20-21. He is expected to hold talks with his
Australian counterpart Stephen Smith and Defense Minister John
Faulkner on such issues as nuclear disarmament and nonproliferation,
as well as climate change. He will also discuss with the two
ministers Japan's research whaling, to which Australia is strongly
opposed.

6) Defense panel members announced

ASAHI (Page 12) (Full)
Eve., February 16, 2010

The Hatoyama cabinet yesterday announced its establishment of the
"Council for National Security and Defense Buildup in the New Era,"
a private advisory panel for the prime minister with the aim of
revising the National Defense Program Guidelines toward the end of
this year. The panel is chaired by Shigetaka Sato, chief executive
officer of Keihan Electric Railway Co., Ltd., who will be the next
president of the Osaka Chamber of Commerce and Industry. The panel
will come up with a report this summer.

The other panel members are: Yoko Iwama, professor at the National
Graduate Institute for Policy Studies (GRIPS); Takashi Shiraishi,
director of the Institute of Developing Economies (IDE) of the Japan
External Trade Organization (JETRO); Yoshihide Soeya, professor at
Keio University; Hiroshi Nakanishi, professor at Kyoto University's
postgraduate school; Takako Hirose, professor at Senshu University;
Yasuhiro Matsuda, associate professor at the University of Tokyo;
Tadashi Yamamoto, president of the Japan Center for International
Exchange (JCIE); Yasunari Ito, former administrative vice defense
minister; Ryozo Kato, former ambassador to the U.S.; and Takashi
Saito, former chief of the Joint Staff Council, Self-Defense
Forces.

7) Japan's defense industry shrinking

NIKKEI (Page 2) (Abridged)

TOKYO 00000306 006 OF 009


February 17, 2010

Japan's defense industry, which currently has a total of more than
1,000 companies, is weakening due to cutbacks in the government's
defense budget. More than 50 firms manufacturing parts for defense
equipment, mainly small and midsize companies, will discontinue
their defense-related business operations. Those in the defense
industry strongly fear that Japan may not be able to maintain its
industrial infrastructure, such as technical know-how and
manufacturing facilities.

The Eurofighter, a new fighter jet model being co-developed by four
European countries, and the F-35, also a new fighter model in the
pipeline with the participation of nine countries including the
United States and Britain, symbolize the joint development of
large-scale hardware. Each of the participating countries
contributes its strong technologies and the countries all share the
cost of development, thereby reducing the unit cost through mass
production. The F-35 is a candidate for Japan's next-generation
fighter (FX), but Japan has not been able to participate in its
development.

For its introduction of F-35 fighters, Japan has no other choice but
to produce them under license with each country's consent or import
them. For either method, Japan will have to bear a comparatively
high cost for its F-35 introduction compared to the countries
participating in their international joint development.

Japan's fighter planes used to be based on its licensed production
of U.S. military aircraft. In recent years, however, the United
States has strengthened its policy of not providing its cutting-edge
technologies even to its allies. The United States has not agreed to
export the F-22, a state-of-the-art fighter jet model, to Japan. A
manufacturer's official has a growing sense of crisis, saying, "We
cannot access the newest technologies if we don't participate in
their joint development, and as a result we will fall even further
behind the world in terms of technology."

Japan's defense budget has decreased and its defense industry is now
having a hard time as a result. In 2011, Japan will end its
production of the F-2, a fighter support plane for the Air
Self-Defense Force. This means that Japan's production of fighter
planes will cease for the first time since it resumed producing them
in the postwar days. Among companies manufacturing parts for fighter
planes, a total of 20 manufacturers have already decided to back
down.

8) GSDF begins relief activities in Haiti

YOMIURI (Page 2) (Excerpts)
February 17, 2010

Masakazu Hamasuna, Port-au-Prince

The Ground Self-Defense Force's relief team dispatched to conduct UN
peacekeeping operations for the reconstruction of Haiti began ground
leveling work under the control of the UN Stabilization Mission
(MINUSTAH) in the country's capital of Port-au-Prince shortly after
10:00 a.m. on Feb. 16 (shortly after midnight on Feb. 17, Japan
time). This is the first time for the team to conduct work outside
its camp using heavy machinery. The GSDF has now launched its
full-scale PKO activities in Haiti.

TOKYO 00000306 007 OF 009

On Feb. 16, some 20 GSDF personnel worked on the project.

The team completed the work of leveling the ground for a storage
area for an international organization on Feb. 16. As the next step,
the team intends to expand its activities to include work to build
facilities for refugees. This is the second large-scale PKO mission
the SDF has engaged in following the one in East Timor in 2002-2004.
The current mission in Haiti will run through Nov. 30.

9) DPJ paving way for the steady destruction of the LDP

NIKKEI (Page 3) (Full)
February 17, 2010

House of Councillors member Gotaro Yoshimura, who left the Liberal
Democratic Party (LDP), announced in a press conference in Fukuoka
City yesterday that he would join the People's New Party (PNP). The
Democratic Party of Japan (DPJ), which has formed a floor group with
the PNP in the Upper House, approved the membership of Yoshimura in
the group in a meeting of its Upper House standing executives on the
same day. The DPJ has now secured a majority -- 122 seats -- needed
to control the Upper House, on a group basis, paving the way for the
group to pass bills in the chamber without the support of the Social
Democratic Party.

Yoshimura's joining the DPJ-led floor group, following Upper House
member Kotaro Tamura's membership in the DPJ after leaving the LDP,
is seen as part of Secretary General Ichiro Ozawa's maneuvering to
undermine the LDP. Ozawa is expected to implement a full-scale
operation to destroy the LDP after the Upper House election this
summer. The political situation will likely be greatly affected.

Yoshimura said in the press conference: "I am determined to
establish a real conservative political system for the sake of the
people."

Yoshimura will run in the Fukuoka constituency (two seats in the
contest) on the PNP ticket in the Upper House election. The DPJ has
already decided to field several candidates in several
constituencies, so coordination will be held between the two
parties.

The DPJ leadership has said that the party would maintain the
current coalition framework of the DPJ, the SDP and the PNP. DPJ
Upper House Secretary General Yoshimitsu Takashima emphasized in a
press conference yesterday: "There is and will be no reason for the
DPJ to break up the coalition government."

Even so, Ozawa is trying to find out a point of contact with the New
Komeito. Ozawa has repeatedly expressed his positive view about the
New Komeito's proposal for giving the right to vote in local
elections to permanent foreign residents in Japan. The New Komeito
also voted in favor of the second supplementary budget bill for
fiscal 2009.

If the DPJ joins hands with the New Komeito, which has secured 21
seats in the Upper House, the government will become more stable
compared with the current DPJ-led coalition with the PNP and the
SDP, which holds a smaller number of lawmakers. The DPJ is stepping
up efforts to capture a single-party majority in the Upper House
election, but even if the party fails to do so, excluding the SDP

TOKYO 00000306 008 OF 009


from the coalition government is becoming a distinct possibility.

10) Government is preparing to question Sea Shepherd activist about
intruding into Japanese whaling ship: Hirano

NIKKEI (Page 2) (Full)
February 17, 2010

In connection with a member of the U.S. environmental conservation
group Sea Shepherd Conservation Society who is now being held
(aboard the Shonan Maru No. 2) after he intruded into a Japanese
research whaling vessel, Chief Cabinet Secretary Hirofumi Hirano
stated yesterday at a press conference: "We are now moving forward
with the necessary preparations to bring him to Japan," indicating
that the activist will be turned over to the Japan Coast Guard for
questioning in Japan. At the same time, Hirano said, "I think we
will investigate allegations that he breached criminal law by
trespassing on a vessel of our country."

11) Japan regains top spot as holder of U.S. Treasuries

YOMIURI (Page 2) (Full)
February 17, 2010

Taro Koyano, New York

According to the international capital balance statistics released
by the U.S. Department of the Treasury on Feb. 16, Japan as of the
end of December 2009 overtook China as the largest holder of U.S.
Treasury securities for the first time in 16 months. Japan's
holdings of U.S. Treasury securities increased for two straight
months to 768.8 billion dollars (approximately 69 trillion yen), up
11.5 billion dollars from the previous month. In the meantime,
China's holdings stood at 755.4 billion dollars, down 34.2 billion
dollars from the previous month.

China is diversifying its foreign reserves. If its holdings of U.S.
treasury securities continue to drop, it could deal a blow to the
U.S. government, which is issuing a large amount of Treasury bonds.

Japan was the largest foreign holder of U.S. Treasury securities
until it was surpassed by China in September 2008.

12) Goal for price increases should be set at 1 percent: Foreign
minister stresses cooperation with BOJ

MAINICHI (Page 4) (Full)
February 17, 2010

Deputy Prime Minister and Finance Minister Naoto Kan at a Lower
House Budget Committee meeting on Feb. 16 expressed his perception
that 1 percent or so would be appropriate as a goal for the rate of
consumer price increases. He then stressed his determination to work
together with the Bank of Japan (BOJ) in finding a way to climb out
of the deflationary trend. He said, "It is in a sense desirable if
the government and the BOJ work together toward a common goal." He
made this statement in response to a question asked by Kozo Yamamoto
of the Liberal Democratic Party (LDP).

The BOJ at its policy-setting meeting held in December last year
finalized its stance on a level to achieve the stabilization of
prices (the rate of price increases), deciding that level should be

TOKYO 00000306 009 OF 009


in the plus territory and below 2 percent. Most panel members agreed
that 1 percent or so would be an appropriate level. Referring to
this stance, Kan at the meeting explained, "Regardless of whether 1
percent is sufficient or not, we should set a figure at around that
level as a policy goal." He also said, "Our perception of the goal
is in agreement with the BOJ."

Some take the view that Kan was taking the introduction of an
inflationary goal for the management of monetary policy, based on a
set goal for price increases, into account when he made that
statement. One focus in the future will likely be on how to define
the rate of price increases in monetary policy at a meeting between
the government and the BOJ.

The BOJ's stance is that the figure set for the rate of price
increases is just a benchmark, and so it should not entail any
obligation to achieve that goal or bind (the BOJ's) monetary policy.
The basic guidelines in the New Growth Strategy, which the
government mapped out late last year, put forward a goal of nominal
growth of 3 percent or 2 percent in real terms on average up to
fiscal 2020. This policy takes price increases into account and
anticipates that the nominal growth rate will surpass the real
growth rate.

ROOS

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