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Cablegate: Daily Summary of Japanese Press 02/25/10

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RUYNAAC/COMNAVFORJAPAN YOKOSUKA JA
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RUEHBJ/AMEMBASSY BEIJING 3247
RUEHUL/AMEMBASSY SEOUL 9928
RUCNDT/USMISSION USUN NEW YORK 9269

UNCLAS SECTION 01 OF 06 TOKYO 000381

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: DAILY SUMMARY OF JAPANESE PRESS 02/25/10

INDEX:

(1) Japan-U.S. talks set to start today; reduction in "sympathy
budget" to take center stage; a salary review certain to throw talks
into confusion (Asahi)

(2) Membership of panel on National Defense Program Guidelines
reflects Hatoyama administration's purge of LDP color, focus on Asia
(Asahi)

(3) Full text of statement adopted by Okinawa Prefectural Assembly
on Futenma relocation (Ryukyu Shimpo)

(4) Postal services likely to be bloated: (Part 1) Offering uniform
services nationwide and cost sharing (Nikkei)

ARTICLES:

(1) Japan-U.S. talks set to start today; reduction in "sympathy
budget" to take center stage; a salary review certain to throw talks
into confusion

ASAHI (Page 3) (Full)
February 25, 2010

Masahiro Tsuruoka, Hisashi Ishimatsu

Foreign and defense officials of Japan and the United States will
begin talks today on Japan's host nation support (omoiyari yosan,
literally "sympathy budget") for U.S. forces stationed in Japan. The
reason is that the Japan-U.S. Special Measures Agreement connected
to HNS will expire in March 2011. The Japanese side is expected to
seek (U.S. understanding) of a reduction in HNS through a review of
the salary levels of base workers, as was recommended during the
government's screening of budgetary requests for state projects. The
U.S. side is likely to put up resistance.

HNS will be taken up in the deputy-director-level talks that will be
attended by visiting Principal Deputy Assistant of State Joseph
Donovan, Deputy Assistant Secretary of Defense Michael Schiffer, and
other senior State Department officials responsible for security
talks from the U.S. side.

Foreign Minister Katsuya Okada had initially revealed a plan to
address a review of HNS after settling the issue of relocating the
U.S. Marine Corps' Futenma Air Station (in Ginowan, Okinawa
Prefecture), but it has been decided to begin the bilateral talks
without waiting for a settlement. The Japanese side intends to
submit an agreement bill to the Diet in this fall's extraordinary
session and have it approved there. "To do so, talks must start
now," a person familiar with the situation said.

There is concern among officials in charge that a complication of
the Futenma issue, which the Japanese government is aiming to settle
by the end of May, might prevent the two sides from discussing HNS
in a level-headed manner. The bilateral agreement was last revised
in 2008. During that period, Diet approval of a bill revising the
bilateral agreement was delayed owing to the confrontation between
the ruling and opposition camps over tax revenues for road projects,
creating a period without a Japan-U.S. agreement for the first
time.


TOKYO 00000381 002 OF 006


Last November the government screened the salary levels of base
workers that are currently uniform throughout the country. During
the screening, it was pointed out that the base pay of base workers
in Okinawa Prefecture and elsewhere exceed the salary levels of the
private sector. Yukio Edano, who served as the screening team
leader, concluded (the salary levels) need a review. Edano has since
become state minister for government revitalization.

During the period when the Democratic Party of Japan (DPJ) was an
opposition party, it raised questions about the fact that such
occupations as pleasure-boat operators and animal caretakers that
are for recreational purposes are included in the types of jobs
covered by HNS. They might become subject to a review.

In the DPJ administration there are strong calls for a review
because (HNS) is regarded as symbolizing the previous LDP
administration's effort to maintain the Japan-U.S. alliance. When
Japan started providing HNS in 1978, its assistance covered only
welfare and other expenses for workers. Japan's support gradually
expanded to cover their special allowances, basic pay, and
utilities. In fiscal 1999, HNS swelled to 275.6 billion yen.

Utilities, special allowances, and other expenses have been reviewed
in recent years owing to Japan's deteriorating fiscal situation. The
fiscal 2010 budget includes 191.9 billion yen for HNS, which is
about the same level as that of fiscal 1992.

Nevertheless, it is difficult to fully review and deeply cut HNS.

During his visit to Japan last fall, Secretary of Defense Robert
Gates discouraged Japan from cutting back on HNS, pointing out that
the presence of the U.S. military has helped Japan curb its defense
spending.

A review of workers' salary levels might have a negative impact on
employment in areas near the bases. The All Japan Garrison Forces
Labor Union, which supported the DPJ in last year's general
election, is also opposed to a review. As such, a full-fledged
discussion might not take place until after the House of Councillors
election this summer.

(2) Membership of panel on National Defense Program Guidelines
reflects Hatoyama administration's purge of LDP color, focus on
Asia

ASAHI (Page 4) (Full)
February 25, 2010

Hisashi Ishimatsu

The membership of the Council on Security and Defense Capabilities
for the New Era set up by the Hatoyama cabinet to work on the
revision of the National Defense Program Guidelines (NDPG) before
the end of 2010 reflects the Democratic Party of Japan's focus on
Asia and the United Nations. It appears that one purpose of the
panel is to provide the theoretical foundation for the concepts
advocated by Prime Minister Yukio Hatoyama, such as the East Asian
Community and the deepening of the Japan-U.S. alliance.

The theme of the panel's second meeting on Feb. 24 was the
"international military situation in areas close to Japan." Council
members voiced the following opinions: "China should be watched to

TOKYO 00000381 003 OF 006


see if the trends so far (such as military expansion) continue into
the future" and "There could be new ways to cooperate with the
Republic of Korea in security."

The only council member who has been reappointed from the council
under the previous Aso administration is Professor Hiroshi Nakanishi
of Kyoto University's graduate school. Professors Shinichi Kitaoka
and Akihiko Tanaka of Tokyo University, theoreticians on security
issues whose services were frequently sought under the Liberal
Democratic Party administrations, have not been appointed to the new
panel.

The new members of the panel reflect the focus on Asia. Their
combined expertise nearly covers all of Asia.

Takashi Shiraishi, president of the Institute of Developing
Economies of the Japan External Trade Organization, is a well known
scholar on Southeast Asia. His publications include the book Umi no
Teikoku: Ajia wo Do Kangaeru ka (Martime Empire: Perspectives on
Asia). Senshu University Professor Takako Hirose is an expert on
South Asian politics and foreign relations and is particularly
well-versed in the political situation in India and Pakistan.
Associate Professor Yasuhiro Matsuda of Tokyo University specializes
in the politics and foreign affairs of China and Taiwan. One of the
key issues in the NDPG is how to deal with regional instability
resulting from the rise of
China, which has implemented a double-digit increase in its defense
budget for 21 consecutive years. It can be said that Matsuda was
selected in light of this issue.

One other distinguishing feature of the panel is that it has a
number of experts on international coordination and cooperation.
President Tadashi Yamamoto of the Japan Center for International
Exchange has long been involved with exchanges of experts and
parliamentarians between Japan and the Western nations and Asia. He
has consistently argued that "relations between countries are not
built by the governments alone."

Keio University Professor Yoshihide Soeya is an advocate of "middle
power diplomacy" - the idea that Japan's new foreign policy should
focus on multilateral diplomacy with Asia while remaining anchored
by the Japan-U.S. security alliance. This could well become the
theoretical underpinning of Hatoyama diplomacy.

Hatoyama has advocated the concept of an "East Asian Community"
since he became prime minister. However, he has not been able to
obtain international understanding on this concept. The U.S.
suspects that it is a scheme to exclude the U.S. It appears that the
Prime Minister may be attempting to systematize his concept by
gathering experts knowledgeable about the various regions of Asia
and international cooperation.

Members of the Council on Security and Defense Capabilities for the
New Era

Shigeo Sato, 68, CEO of Keihan Electric Railway Co., chairman
Yoko Iwama, 45, professor at the National Graduate Institute for
Policy Studies, specializing in European security
Takashi Shiraishi, 60, president of Institute of Developing
Economies, Japan External Trade Organization, specializing in
Southeast Asian politics
Yoshihide Soeya, 54, professor at Keio University, specializing in

TOKYO 00000381 004 OF 006


Japanese foreign policy
Hiroshi Nakanishi, 47, professor at Kyoto University's graduate
school, specializing in international politics
Takako Hirose, 61, professor at Senshu University, specializing in
South Asian politics and foreign affairs
Yasuhiro Matsuda, 44, associate professor at Tokyo University,
specializing in Asian diplomatic history, security affairs of China
and Taiwan
Tadashi Yamamoto, 73, president of Japan Center for International
Exchange, specializing in international exchange
Yasunari Ito, 64, former vice minister of defense
Takashi Saito, 62, former chief of staff of SDF Joint Staff
Ryozo Kato, 68, former ambassador to the U.S.

(3) Full text of statement adopted by Okinawa Prefectural Assembly
on Futenma relocation

RYUKYU SHIMPO (Page 3) (Full)
February 25, 2010

Statement on the early closure and return of the U.S. forces'
Futenma Air Station, opposition to relocation within Okinawa, and
demand for relocation out of Japan or out of Okinawa

The U.S. forces' Futenma Air Station is located in an urban area in
central Okinawa. There is a high concentration of houses, schools,
and other facilities in this area, and in case of an accident, it is
assumed the damage would affect many residents and facilities in the
area. This is a very dangerous location.

The crash of a CH-53D, a large U.S. Marine transport helicopter, on
the campus of the Okinawa International University on Aug. 13, 2004
was just one step away from causing a major disaster. It
demonstrated once again that Futenma is "the most dangerous airfield
in the world."

For this reason, the people of Okinawa have strongly demanded the
return of this airfield. In light of this, the governments of Japan
and the United States have agreed on the complete return of the
Futenma base under the 1996 Special Action Committee on Okinawa
(SACO) agreement and the U.S. Forces Japan realignment talks of
2006. However, its return has not been realized even today, 13 years
after the agreement. The danger posed by the airfield has been left
unabated.

Based on lessons learned from the tragedy of World War II, Okinawans
aspire for a peaceful and safe Okinawa with no military bases. The
return of the Futenma base on condition of relocating it somewhere
else under the SACO agreement will only result in its relocation
within the prefecture. The popular will in Okinawa has been clearly
expressed in various referendums, rallies, and public opinion polls
conducted hitherto. The coastal area of Henoko in Nago City, which
has been identified as the relocation site, is a precious sea area
that nurtures dugongs, recognized as a natural treasure by the
Japanese government and also protected under international
convention, and other rare species of flora and fauna. This sea area
is recognized for its unrivalled beauty in the world, with new
species of coral having been discovered there.

The citizens of Ginowan and Okinawa demand the early complete return
of the very dangerous Futenma Air Station. They demand that the
government take responsibility for resolving all issues relating to

TOKYO 00000381 005 OF 006


the use of returned military base land and other matters.

The mayor of Nago City is opposed to building a new military base
both offshore and on land in Henoko.

From the standpoint of protecting the life, property, and living
environment of the people of Okinawa, the Prefectural Assembly
strongly demands that the Japanese and U.S. governments close down
and return the Futenma Air Station at an early date, abandon plans
to relocate this base within Okinawa, and relocate it out of Japan
or out of Okinawa.

Feb. 24, 2010
Okinawa Prefectural Assembly

(To be presented to the prime minister, foreign minister, state
minister for Okinawa affairs, and the chief cabinet secretary)

(4) Postal services likely to be bloated: (Part 1) Offering uniform
services nationwide and cost sharing

NIKKEI (Page 5) (Full)
February 23, 2010

The work to take a second look at postal services by the government
and the ruling parties is reaching its final stage. The postal
reform plan drafted by the government earlier in the month states
that postal reform is to be carried out with emphasis placed on the
public benefits and regional characteristics of the Japan Post
group. Thus the draft hints that postal services could revert to
their original form -- a government enterprise. The draft mandates
Japan Post offer uniform financial services nationwide. In the
meantime, the government will make the company boost profits by
expanding business areas to cover the cost of providing such
services. A gigantic government-affiliated company is about to come
into being.

Ratio of government capital?

The government intends to submit the Postal Reform Bill (tentative
name) to the Diet as early as March. The focus is on the size of the
government's investment ratio and on whether or not the group's
scope of business should be expanded.

Some government and ruling party officials opposed the government's
draft. One remarked: "That's (Senior Vice Minister of Cabinet Office
for Financial Services) Ohtsuka's (private plan)." Parliamentary
Secretary of Internal Affairs and Communications Kensei Hasegawa of
the People's New Party released an opinion paper stating that the
government's share of Japan Post should exceed 50 percent. He said
that if his opinion was rejected he would have no choice but to
resign.

The draft proposes several ratios of government capital, such as
over one-third or over a half. However, the government was unable to
set a definite figure. Hasegawa, a former postal bureaucrat, is
calling for a Japan Post system providing the minimum number of
uniform services involving government necessary for people's
livelihood.

In the meantime, the draft hints at a direction of allowing Japan
Post in principle to enter new businesses without any restrictions.

TOKYO 00000381 006 OF 006


It indicates a policy of approving new businesses, such as housing
loans or cancer insurance. It is estimated that maintaining
universal services for postal savings, postal insurance, and mail
delivery nationwide costs more than 1 trillion yen a year. Within
the government there have been calls for raising the caps on postal
savings and postal insurance.

Since offering services costs money, Japan Post's business sphere
must be expanded to pay for them. This argument appears coherent.
However, it could lead to the emergence of a behemoth
government-affiliated company that enjoys both the trust of a
government-backed entity and the degree of freedom of private
companies.

Concern about impartiality

The draft neglects the basic principle for postal privatization -
improving services through the private sector's ingenuity and
originality by eliminating the wasteful services endemic to
government-backed enterprises. But the argument for expanding Japan
Post's services is prevailing. There are indications that the
attempt to alter the current flow of massive amounts of money from
households to postal savings and insurance by entrusting the public
sector with the use of such funds for investment, loan transactions,
etc. could be reversed. Japanese Bankers Association Chairman
Katsunori Nagayasu said, "If Japan Post becomes a government-backed
company with government capital remaining in postal services and
postal savings, then competitive conditions between Japan Post and
private financial institutions would differ substantively."

The government and the ruling parties held a policy meeting on the
22nd. Some participants called for the need for the government to
determine a ratio of government capital acceptable to private
financial institutions. Other participants refuted this view, with
one saying, "It is strange that the government is unable to bring
such a matter under its control."

Ohtsuka during a debate with Heizo Takenaka, who led the postal
privatization (during the Koizumi administration), indicated a
certain level of understanding of the direction for privatization.
State Minister for Financial Affairs Shizuka Kamei takes the
position of not allowing Japan Post to revert to its former self - a
state-run public corporation. However, he advocates strengthening
services using post offices as bases for local residents. The
government is expected shortly to consolidate its stance regarding
the ratio of government capital and the upper limit of postal
savings. However, views of those concerned about the scope of
business and other matters are at odds.

ROOS

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