Cablegate: Japanese Morning Press Highlights 12/26/06

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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 12/26/06

Index:

1) Top headlines
2) Editorials

Opinion poll:
3) Abe Cabinet support rate continues downward trend, dropping 8
points to 51% in Nikkei poll, with majority of Japanese unhappy with
way he is doing his job
4) Nikkei poll shows 48% would tolerate increased consumption tax
but that is a 6-point drop since poll in August

Defense and security issues:
5) Recent government study of nuclear option concluded that would
take Japan over 3 years to make prototype model warhead at cost of
200-300 billion yen
6) JDA chief Kyuma trying to win over Okinawa resistance to Futenma
relocation plan by hinting at 3-year speed up
7) In consultation with Okinawa Prefecture, government apologizes
for relocation decisions but gulf remains wide on US base issues
8) Okinawa governor repeats his opposition to current Futenma
relocation plan
9) US sounds out Japan on extra deployment of radar capable of
spotting missiles header for America

10) US, Japan exchange notes on provision of geographical data

11) Foreign Minister Aso in phone call to China's Foreign Minister
Li criticizes Pyongyang, stresses importance of continuing 6-party
talks

12) Japan tells Iran it is imposing sanctions on it for defying
international community with its nuclear program

13) Yasukuni makes changes in WWII display at Yushukan but wording
that US wanted to start war with Japan unchanged

14) Ruling parties, to avoid scheduling summer Upper House election
when nation on holiday, schedule opening of next Diet for Jan. 25

15) Final regulatory reform report seen as a roll back

Articles:

1) TOP HEADLINES

Asahi:
Nikko to ask ex-managers to return part of salary

Mainichi:
Sender's identification to be disclosed in case of privacy violation
on Internet

Yomiuri:
Unpaid medical expenses come to 8.5 billion yen at 290 public
hospitals during past 3 years

Nihon Keizai:
New antitrust guidelines to crack down on software bundling

Sankei:
NPA panel proposes strengthening anti-child-pornography measures on

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comic books, PC games and animated cartoons

Tokyo Shimbun:
Administrative Reform Minister Sata's political organ submitted
false reports on political funds -- 78 million yen spent for dummy
office

Akahata:
Government regulatory council's final report calls for introduction
of no-overtime-work system

2) EDITORIALS

Asahi:
(1) International community should not turn blind eye to change in
Iran
(2) Murai to coach Chinese national synchronized swimming team as
bridge between Japan and China

Mainichi:
(1) Nikko Securities lacks perception of seriousness of its crime
(2) Prime Minister Abe must take responsibility

Yomiuri:
(1) Good news for 2006: Traditional values re-recognized

Nihon Keizai:
(1) UN sanctions resolution Iran should be made good chance to lead
change in Iran
(2) Nikko is to blame for improper accounting

Sankei:
(1) Joint Japan-China history study team: Perception gap should be
made clear
(2) Nikko managers must conduct themselves in more disciplined
manner

Tokyo Shimbun:
(1) Nikko's improper accounting is betrayal of the market
(2) Japan-China history study panel should bring new perspective
into the Chinese history world

Akahata:
(1) Military budget for next fiscal year is to serve the US
military

3) OPINION

Poll: Abe cabinet's support rate spirals down to 51%

NIHON KEIZAI (Page 1) (Abridged)
December 25, 2006

The approval rating for Prime Minister Shinzo Abe and his cabinet
dropped to 51% in a recent public opinion survey conducted by the
Nihon Keizai Shimbun on Dec. 22-24, down 8 percentage points from a
previous survey taken in late November. Meanwhile, the disapproval
rating for the Abe cabinet was 40%, up 11 points. In the survey,
respondents were also asked whether they appreciated the Abe
cabinet's performance over the past three months since coming into
office. In response to this question, 57% answered "no," with 29%
saying "yes." As seen from these figures, the proportion of negative

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answers outdistanced that of affirmative answers. Such results can
be taken as reflecting his ruling Liberal Democratic Party's recent
reinstatement of its postal rebels who voted against the LDP-led
government's now-enacted postal privatization package in the Diet
and were ousted from the LDP and also reflecting Government Tax
Commissioner Masaaki Honma's resignation over his inappropriate
renting of a government apartment for public servants.

The survey was taken after the government compiled its budget for
fiscal 2007. The Abe cabinet first marked 71% upon its inauguration
in late September but kept going down after that. In the latest
survey, the Abe cabinet's approval and disapproval ratings almost
paralleled those for the Koizumi cabinet in the final survey taken
for it in August (50% approval and 40% disapproval ratings). Among
LDP supporters, the Abe cabinet's support rate was 79%, down 6
points from the last survey. Among those who support the leading
opposition Democratic Party of Japan (Minshuto), the Abe cabinet's
support rate was 20%, down 10 points. Among those with no particular
party affiliation as well, it dropped 10 points to 26%.

The survey was taken by Nikkei Research Inc. over the telephone on a
random digit dialing (RDD) basis. For the survey, samples were
chosen from among men and women aged 20 and over across the nation.
A total of 1,634 households with one or more voters were sampled,
and answers were obtained from 947 persons (58.0% ).

4) Poll: 48% for raising consumption tax, down 6 points from August

NIHON KEIZAI (Page 2) (Full)
December 26, 2006

The proportion of those in favor of raising the consumption tax rate
was 48% in a Nihon Keizai Shimbun poll taken Dec. 22-24, down 6
percentage points from this August's poll that asked a similar
question.

In the latest survey, respondents were asked what to do about the
consumption tax. In response to this question, 30% insisted on
sustaining the consumption tax at its current rate, up 6 points.
Meanwhile, the proportion of those insisting on abolishing the
consumption tax also rose 2 points to 11%. As seen from these
figures, the survey this time shows an increase in the number of
those taking a severe view of raising the consumption tax.

In the breakdown of reasons given by those in favor of raising the
consumption tax, 13% said it would be unavoidable for fiscal
reconstruction, down 6 points. Among other reasons, 35% said it
would be unavoidable if the consumption tax were to be raised for
pension resources or other similar fund-raising purposes only.

The survey was taken by Nikkei Research Inc. over the telephone on a
random digit dialing (RDD) basis. For the survey, samples were
chosen from among men and women aged 20 and over across the nation.
A total of 1,634 households with one or more voters were sampled,
and answers were obtained from 947 persons (58.0% ).

5) Internal government document concludes that it would take Japan
over three years to make a prototype model nuclear warhead at cost
of 200-300 billion yen

SANKEI (Top play) (Excerpts)
December 25, 2006

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This newspaper has learned from an internal Japanese government
document acquired on Dec. 24 that "it would take three to five years
at least for Japan to build a prototype-model miniaturized nuclear
warhead." According to the document, titled, "On the possibility of
a domestically-built nuclear weapon," although Japan has a plant
that can enrich uranium and the technology and facilities to
reprocess spent nuclear fuel used in power plants, it cannot
directly switch to producing nuclear weapons due to the
technological constraints. Although North Korea's nuclear weapon
test set off calls in some circles in Japan for a review of the
three no-nuclear weapons principles and a debate over whether Japan
should possess its own nuclear arms, the report recognized the
reality that even if Japan should have the intention of producing
its own nuclear weapons, it would undoubtedly have to start from
scratch in developing such.

The internal government document was secretly drafted on Sept. 20,
2006, prior to North Korea's nuclear test on Oct. 9. An expert at a
government agency researched and compiled the report. The expert
concluded that it would require over three years until a prototype
miniaturized nuclear warhead could be produced, and that it would
cost between 200 billion and 300 billion yen. So even if Japan
declared that it intended to possess nuclear arms, it could not
immediately produce on its own a deterrence to the nuclear threat
posed by North Korea.

There are two types of materials used in making nuclear weapons:
enriched uranium, which went into making the atom bomb that was
dropped on Hiroshima, and plutonium, which was used to make the bomb
dropped on Nagasaki. Japan has a nuclear fuel recycling facility at
Rokkasho Village in Aomori Prefecture and a factory in Ibaraki
Prefecture for reprocessing spent nuclear fuel and uranium
enrichment. But such facilities are all for light-water reactor use
and inappropriate for making material for use in nuclear weapons.

6) Government-local government consultations on Futenma relocation:
JDA searching for way to break deadlock by proposing shortening the
construction period (of proposed alternate runway) by three years,
with completion possible in 2011

NIHON KEIZAI (Page 2) (Excerpt)
December 26, 2006

The government resumed after a four-month hiatus consultations with
Okinawa Prefecture and local governments affected by the relocation
of the US forces' Futenma Air Station -- the main element in the
realignment of US forces in Japan. Defense Agency (JDA) Director
General Fumio Kyuma announced that he was thinking about speeding up
the timetable for transferring the facilities of that base to Nago
City. It is now set for 2014. JDA has begun studying the possibility
of shortening the construction period by two to three years and to
search for compromise points with Okinawa Prefecture, which is
reluctant to accept the move. However, it is unclear whether the
wide gulf between the government and the prefecture's assertion can
be filled by this compromise proposal.

7) Government determined to settle showdown over Futenma relocation
under Kantei lead, but end still nowhere in sight

ASAHI (Page 2) (Excerpts)
December 26, 2006

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A meeting was held between representatives of the government and
local communities yesterday over the relocation of the US Marine
Corps' Futenma Air Station. In the meeting, both sides indicated
their stance of making compromises. Defense Agency (JDA) Director
General Kyuma apologized for "the current relocation plan that was
agreed on between Japan and the US without considering the opinions
of Okinawa Prefecture," while Okinawa Governor Nakaima praised the
JDA director general's apology as a "considerate remark." The
government deems cooperation by Okinawa Prefecture as indispensable,
with en eye on the upcoming Japan-US Security Consultative Committee
meeting (2+2) next year and the planned submission of related bills
to the regular Diet session next year. The government is now
determined to break the impasse under the lead of the Prime
Minister's Office (Kantei). This does not mean, though, that the
Okinawa government has totally agreed on the current relocation
plan. The end is not yet in sight.

Prior to the meeting, Prime Minister Abe told Chief Cabinet
Secretary Shiozaki: "Debate on various issues related to the planned

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US force realignment will also be conducted In the ordinary Diet
session next year. (The Kantei) must properly play the coordinating
role."

When representatives of both sides met in August, Shinzo Abe, who
was serving as chief cabinet secretary at that time, was asked to
attend it but did not. With an eye on the House of Councillors
elections next year, the opposition camp might cash in on the
standoff between the government and the local authorities in the
ordinary Diet session next year. The government is aiming to win
understanding from Okinawa government with the Kantei coming to the
fore, taking advantage of the election of the new governor.

In late November, just after the Okinawa gubernatorial election,
Shiozaki called in Foreign Minister Aso, Kyuma, and other relevant
government officials to a Tokyo hotel, where the participants agreed
to bring back economic incentives for the northern part of Okinawa,
although the government had decided to scrap them. The agreement
reflected the Kantei's view that the Okinawa issue might be "a risk
for the government," as a senior government official said.

When Japan and the US agreed on the current Futenma relocation plan
in May, the Okinawa government criticized JDA, saying that the
agency put coordination with the local communities in the back seat.
But the agency has kept a low profile recently. In response to a
request in the meeting yesterday from Nakaima for "removing the
danger that Futenma Air Station poses within three years," Kyuma
said, "I am ready to call on the US to speed up the relocation
schedule."

Okinawa government has set forth the closure of Futenma within three
years as a condition for the start of talks on the construction of
alternative facilities. On this matter, Nakaima also said in a press
conference after the meeting that the government made a positive
reply.

In the 2+2 meeting scheduled for January, Japan and the US will
confirm the steady implementation of the overall plan for the
realignment of the US military presence in Japan. Keeping this in
mind, Kyuma also stressed that a large-scale of modification of the
plan would be difficult, saying, "There will be no progress unless
agreement is reached among the four parties, the Japanese

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government, Okinawa prefecture, local communities, and the US."

8) Okinawa governor once again announces his opposition to coastal
plan at Futenma relocation consultative meeting

MAINICHI (Page 4) (Full)
Evening, December 25, 2006

A consultative meeting to discuss the relocation of US forces'
Futenma Air Station in Okinawa was held yesterday afternoon at the
Prime Minister's Official Residence (Kantei) between the government
and affected local governments. Regarding the proposed transfer of
Futenma functions to the coastal part of Champ Schwab in Nago City,
Okinawa (coastal plan), Okinawa Governor Hirokazu Nakaima once again
expressed his opposition, stating, "At the present moment, I cannot
agree with the plan." He then asked that consideration be given to
such measures as dispersing training sites elsewhere and shifting to
a temporary heliport, saying, "We want the government to come up
with measures that will virtually close Futenma Air Station within
three years in order to remove any potential danger."

Defense Agency Director General Akio Kyuma on the government side
responded, "I want to study what methods are our disposal. I will
also work on the US on this issue." This was the first consultative
meeting held under the Abe cabinet.

9) X-band radar: US proposes additional deployment

ASAHI (Page 1) (Abridged)
December 26, 2006

In the wake of North Korea's missile launches in July and its
nuclear test in October, the United States has told the Defense
Agency that the US military and the US Department of Defense would
like to deploy additional "X-band radar" units in Japan, sources
have revealed. The X-band radar-an early warning radar system
intended to intercept intercontinental ballistic missiles (ICBM)
targeted at the United States-has been installed at the Air
Self-Defense Force's Shariki Detachment base in Aomori Prefecture
under a final agreement reached between Japan and the United States
in May on the planned realignment of US forces in Japan. The US
proposal can be taken as indicating a sense of crisis for the United
States, which wants to step up its watch on North Korean missiles.
The Defense Agency is checking into whether it is possible to accept
the proposed deployment of additional X-band units.

The US proposal, which was made in mid-November, is intended to
intensify US Forces Japan's watch to keep tabs on North Korea's
Taepodong 2, a long-range ballistic missile that is highly likely to
cover the US mainland. This shows that the X-band radar's deployment
in Japan is aimed primarily at defending the US mainland, one says.
According to the Japan-US Security Treaty, however, Japan is to
provide USFJ with facilities (and areas) "for the purpose of
contributing to the security of Japan and the maintenance of
international peace and security in the Far East." The first time
the X-band radar was introduced at the Shariki base, questions were
raised about its consistency with the security pact. This time,
similar questions will likely be voiced again over the X-band
radar's additional deployment in Japan.

According to US military sources, the additionally planned X-band
radar is to watch out for US-bound ballistic missiles from a

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Taepodong-2 launch facility located at Musudan-ri, a remote village
on the northeast coast of North Korea. In addition, it is reportedly
aimed to step up the US military's readiness to watch and track
ballistic missiles launched at US forces in South Korea and the US
Kadena Air Base in Okinawa Prefecture.

The X-band radar emits strong radio waves, so its deployment
location is required to meet some conditions. For instance, it must
be a coastal area that is on the Sea of Japan side and is free from
interference from radio waves. In addition, it is required to be a
facility of the Self-Defense Forces, where radar equipment can be
trucked. In the case of anticipating the path of a ballistic missile
targeted at Kadena Air Base, the X-band radar is likely to be
installed at SDF bases along the Kyushu-Chugoku coastline on the Sea
of Japan side.

10) Japan, US sign official note to exchange geographical data

TOKYO SHIMBUN (Page 2) (Slightly abridged)
December 23, 2006

The Foreign Ministry announced yesterday that Japan and the United
States signed an official note for the two countries to provide
geographical data across the world to the other side. Foreign
Minister Taro Aso and US Deputy Chief of Mission Joseph Donovan
signed the note yesterday.

The ministry explained, "The note specifies a framework for
cooperation between Japan and the US in the geographical airspace
information area, such as maps, marine charts, and joint research
activities." But the US is expected to provide Japan with mainly
geographical information obtained from its military spy satellites.
The purpose of this agreement is likely to be to share intelligence
regarding military moves by North Korea and China, focusing on North
Korea's recent nuclear test and missile launches, as well as on the
Chinese Navy's advance into the Pacific Ocean.

According to the Defense Agency, geographical airspace information
includes wide-ranging areas, such as recent measuring data, the
names of places, and routes.

11) Aso, Li agree to continue working together on keeping framework
of six-party talks

YOMIURI (Page 2) (Full)
December 26, 2006

Foreign Minister Taro Aso held yesterday telephone talks with his
Chinese counterpart Li Zhaoxing for about 30 minutes. Referring in
it to the fact that no progress was made in the six-party talks on
the North Korean nuclear programs, Aso criticized North Korea,
saying:

"North Korea should change its stance of bringing up the US
financial sanctions on it, refusing our proposal to launch
discussion on the implementation of a joint statement (that would
call on it to abandon its nuclear programs)."

Aso and Li agreed to continue efforts to promote progress in the
six-party talks so that the Korean Peninsula would be denuclearized
as soon as possible.

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Vice Foreign Minister Yachi: Pressure on North Korea needed

Referring at a press conference to the six-party talks having
wrapped up with no progress, Administrative Vice Foreign Minister
Shotaro Yachi expressed the perception that sanctions against North
Korea should be strengthened. He stated: "I think we should step up
pressure on the North, while keeping the door for a dialogue open,
based on our basic dialogue-and-pressure policy."

12) Government conveys to Iran its decision to impose sanctions
against it

NIHON KEIZAI (Page 2) (Full)
December 26, 2006

Following the adoption of a sanctions resolution against Iran by the
United Nations Security Council (UNSC), the government yesterday
decided to impose financial sanctions on that nation for its uranium
enrichment activities and an embargo on trade in goods and
technologies starting next January, and it then conveyed its
decision to Tehran. The key element of the financial sanctions is
freezing financial assets of 10 organizations and 12 individuals
mentioned in the resolution.

Foreign Minister Taro Aso yesterday evening telephoned his Iranian
counterpart Foreign Minister Motaki and conveyed Japan's decision to
take sanctions measures in compliance with the UN resolution. He
told Motaki that Iran should suspend all its uranium enrichment
activities and return to the framework of talks. However, Motaki
rejected the call, noting, "The US resolution is illegal. Iran will
not backtrack on its right to peaceful use of nuclear power."

13) Yasukuni Shrine to newly display data showing US intention of
starting war

SANKEI (Page 2) (Full)
December 26, 2006

Yasukuni Shrine has decided to change displays at its exhibit hall,
Yushukan, in response to criticism from the United States, starting
next January. The shrine will delete the expression that President
Roosevelt prompted Japan to open hostilities with the aim of
revitalizing the US economy, but the diaries of Henry Stimson will
be newly displayed. The diaries show that the US had the intention
of starting a war with Japan. As it stands, the shrine's policy of
demonstrating Japan's position will remain unchanged.

The panel titled "Roosevelt's grand strategy" will be modified most
significantly. The exhibit is attached with this explanation: "The
only way left for Roosevelt was to urge Japan, which had few natural
resources, to open hostilities by pressing it into a corner with the
embargo. Owing to the war, the US economy completely recovered."
This expression will be removed and will be totally rewritten.

US Ambassador to Japan Thomas Schieffer, former Deputy Secretary of
State Armitage, and House Foreign Affairs Committee Chairman Henry
Hyde lashed out at this expression. Criticism was also erupting even
from domestic conservative intellectuals, with one claiming, "It is
inaccurate to focus only on economic reasons."

Meanwhile, Yasukuni will newly exhibit the "Four Hull Principles,"
the "Hull Note," the "Diaries of Stimson" both in English and

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Japanese, as well as the Imperial Order to Start War in English.
These historical data show that the US had an intention of engaging
in warfare by prompting Japan to start war.

14) Ruling coalition requests opening regular Diet session on Jan.
25 in order to avoid setting day for Upper House election during
three-day holiday period

ASAHI (Page 4)(Full)
December 26, 2006

The Diet affairs committee chairmen of the ruling Liberal Democratic
Party (LDP) and its coalition partner New Komeito yesterday called
on Chief Cabinet Secretary Yasuhisa Shiozaki at the Prime Minister's
Official Residence (Kantei) to ask the government to convene the
next regular Diet session on Jan. 25. Although Shiozaki told them
that Prime Minister Shinzo Abe would make a final decision on the
matter, the government will likely accept the ruling coalition's
request. The LDP initially looked for the possibility of opening the
regular session on Jan. 19, but it changed the date since the New
Komeito insisted that they must not give the public the impression
that they set the schedule to lower the turnout for the next House
of Councillors election.

If the session convenes on Jan. 25, it will run for 150 days until
June 23. The Public Office Election Law states that an Upper House
election should be conducted during the period that starts 24 days
after the close of a Diet session and ends 30 days after the
session. If the session is not extended, the official campaign for
the Upper House election would start on July 5 and the election day
would be on July 22.

If the regular session convenes on Jan. 19 as the LDP initially
planned, the election day would be July 15, which would be in the
middle of the three-day holiday period. Opposition parties sought to
check the ruling camp, arguing, "The ruling parties plan to use New
Komeito's organized votes by lowering the turnout for the election."
In part to avoid such criticism, New Komeito was reluctant to
convene the session on Jan. 19.

Some lawmakers in the ruling parties were concerned that there would
not be enough time to prepare Prime Minister Shinzo Abe's Diet
policy speech, since he plans to make an overseas trip in
mid-January if the session is convened on Jan. 19. A senior New
Komeito member said: "We want the prime minister to throw a hard
fast ball. For that end, he needs sufficient time for preparation."

15) Deregulatory Council: Final report largely retreats, fails scrap
obligation to set up education boards

ASAHI (Page 2) (Excerpts)
December 26, 2006

The government's Regulatory Reform and Privatization Promotion
Council, chaired by Takao Kusakari, chairman of Nippon Yusen,
submitted a final report to Prime Minister Abe. The report did not
include a proposal for scrapping the obligation to establish
education boards, which the panel proposed in its interim report
issued in July. The report also left out a proposal for limiting
trade unions' right to bargain collectively, which was in the draft
mapped out early this month. For the panel, contents of the final
report have thus retreated. Prime Minister Abe advocates promotion

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of regulatory reform. He at the same time attaches importance to
discipline. This equivocal stance of the prime minister appears to
have had a delicate impact on the report.

This is the last report for the panel, which is to go out of
existence at the end of March next year. Also included in the final
report are revising working hour legislation, such as white-collar
exemption, under which some white-collar workers will be exempt from
the working hour regulation and the right to receive overtime
payments, scrapping the rule obliging companies to give employment
offers directly to temporary workers dispatched to them,
implementing a teacher performance evaluation system and releasing
results, studying and looking into the possibility of adopting an
education voucher system and making sure that parents are
familiarized with a school option system that allows children to go
to schools outside their school zones to avoid bullying.

In the meantime, many proposals have been removed from the draft.
The final report postponed the inclusion of a timeline for reaching
a conclusion on the adoption of the education voucher system. A
proposal for considering limiting the right to bargain to labor
unions to those that have more than 10% of employees as members has
been eliminated due to opposition from the Ministry of Health, Labor
and Welfare.

In particular, the panel's interim report, issued in July, called
for scrapping the education board system with the aim of
transferring the authority of the education board to the heads of
municipalities. However, following a series of cases in which
schoolchildren killed themselves due to bullying and many high
schools did not teach subjects set under the curriculum, Abe
stressed that education boards should be responsible for education
in local regions. An increasing number of government officials
called for strengthening the authority and functions of the
education boards.

The draft final report revealed early this month employed the
restrained wording: "Drastic reform should be carried out on the
mechanism of educational administration and the education system."
However, the final report has retreated to the same wording as
employed in the basic policy guidelines on economic and fiscal
management and structural reforms for the fiscal 2006 national
budget adopted at a cabinet meeting this July.

DONOVAN

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