Cablegate: Daily Summary of Japanese Press 10/22/07

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P 220802Z OCT 07
FM AMEMBASSY TOKYO
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INFO RUEKJCS/SECDEF WASHDC PRIORITY
RHEHAAA/THE WHITE HOUSE WASHINGTON DC PRIORITY
RUEAWJA/USDOJ WASHDC PRIORITY
RULSDMK/USDOT WASHDC PRIORITY
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RUEKJCS/JOINT STAFF WASHDC//J5//
RHHMUNA/HQ USPACOM HONOLULU HI
RHHMHBA/COMPACFLT PEARL HARBOR HI
RHMFIUU/HQ PACAF HICKAM AFB HI//CC/PA//
RHMFIUU/USFJ //J5/JO21//
RUYNAAC/COMNAVFORJAPAN YOKOSUKA JA
RUAYJAA/CTF 72
RUEHNH/AMCONSUL NAHA 6299
RUEHFK/AMCONSUL FUKUOKA 3889
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RUEHBJ/AMEMBASSY BEIJING 9651
RUEHUL/AMEMBASSY SEOUL 5705
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UNCLAS SECTION 01 OF 09 TOKYO 004925

SIPDIS

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 10/22/07

Index:

(1) Gov't explanation collapsing due to suspicions over fuel
supplying; US statement fails to show grounds for denial (Asahi)

(2) US expects Japan to put end to diversion allegation involving
MSDF fuel (Nikkei)

(3) Former Defense Agency's bidding for chemical disposal technology
delayed due to senior vice-foreign minister's pressure to adopt
costly Foreign Ministry formula (Sankei)

(4) Controversy over economic policy being reignited in LDP, with
power shifting to lawmakers calling for fiscal reconstruction
(Nikkei)

(5) Government to launch resource diplomacy toward Africa, mulls yen
loans to Angola (Sankei)

(6) Hiroshima police to demand custody of 4 US servicemen over gang
rape (Asahi)

(7) Prime Minister's schedule, October 20 (Nikkei)

(8) TOP HEADLINES

(9) EDITORIALS

ARTICLES:

(1) Gov't explanation collapsing due to suspicions over fuel
supplying; US statement fails to show grounds for denial

ASAHI (Page 4) (Abridged)
October 20, 2007

The government's explanation about the suspected diversion of fuel
provided by the Maritime Self-Defense Force to a US supply ship in
the Indian Ocean is about to collapse. The government explained that
the fuel was appropriately used in line with the purpose of the
Antiterrorism Special Measures Law. On Oct. 18, the US Department of
Defense released a statement denying the suspected diversion of
MSDF-supplied fuel. However, the Pentagon owned up to the difficulty
of tracking the use of MSDF-provided fuel, failing to show any
clear-cut grounds to brush off the allegations. Meanwhile, it was
also brought to light that former Administrative Vice Defense
Minister Takemasa Moriya had often played golf with a defense
contractor. The Diet is scheduled to start deliberations shortly on
a new legislative measure for refueling assistance. However, the
legislation's future course is growing even murkier.

"The United States is the one and only ally (of Japan), and I take
it for granted that we, on the government's part, should trust its
statement." With this, Defense Minister Ishiba welcomed the
Pentagon's statement in yesterday's news conference after a cabinet
meeting.

Despite that official comment, however, a senior official of the
Foreign Ministry said the Pentagon statement was not substantial
enough to tide over the Diet session.

The Pentagon statement denied the suspected diversion of fuel,

TOKYO 00004925 002 OF 009

maintaining that the fuel was entirely consumed on Operation
Enduring Freedom (OEF) in the war on terror. But the statement also
said it was difficult to track the actual use of fuel.

Fuel provided by Japan is mingled in a vessel's tank with fuel from
other sources. In the case of indirect refueling from an MSDF supply
ship through another supply ship, the Pentagon said it would be even
more complicated to account for the use of such fuel. In addition,
the Pentagon also admitted that US naval vessels may be engaged in
multiple missions.

The Pentagon, in its statement, underscored the complexity of
tracking how fuel was used. What was then in the US side's mind?
"They say fuel is mingled and their warships are engaged in multiple
missions," a senior official of the Foreign Ministry said. "But,"
this official went on, "that's common sense in the military." The
official added, "The statement shows US government irritation at the
Japanese government's stance of asking it to provide information
about each vessel's use of fuel." Another government official
confessed, "This may provide ammunition for the opposition
parties."

The government is also wavering in its parliamentary replies over
the suspected diversion of fuel.

The USS Kitty Hawk, a US Navy aircraft carrier, was indirectly
refueled with 675,000 gallons by the Tokiwa, an MSDF supply ship,
through a US Navy supply ship. The Kitty Hawk was thereafter engaged
in military operations against Iraq, so she is suspected of having
used MSDF-supplied fuel for the Iraq operations. Defense Minister
Ishiba, sitting in on the House of Representatives Budget Committee
during its Oct. 10 meeting, denied this suspected diversion of
MSDF-provided fuel. "The provided fuel was entirely consumed on OEF
within a three-day timeframe," Ishiba stated before the committee.

However, the leading opposition Democratic Party of Japan (Minshuto)
pursued the government. The DPJ admitted that the Kitty Hawk might
have burned 675,000 gallons in three days' time, but the DPJ also
maintained that the MSDF-provided fuel was mingled in the Kitty
Hawk's tank with fuel from other supply vessels. The DPJ therefore
noted that it could not say the MSDF fuel was not used at all for
the Iraq operations. On Oct. 11, Ishiba slightly retouched his
previous reply, saying the Kitty Hawk "used up an amount of fuel
that is equivalent to the amount of fuel provided by Japan."

Meanwhile, the Defense Ministry looked into nearly 800 fuel supplies
the MSDF has made over the past six years and inquired of the United
States about those fuel supply cases. The United States, however,
concluded that it would be difficult to find out how the MSDF fuel
was used.

(2) US expects Japan to put end to diversion allegation involving
MSDF fuel

NIKKEI (Page 3) (Excerpts)
October 20, 2007

Hiroshi Maruya, Washington

The United States government issued, in short order, two statements
that denied the allegation of diversion to the Iraq war of fuel
provided by the Maritime Self-Defense Force (MSDF) in the Indian

TOKYO 00004925 003 OF 009

Ocean. The US will now call on the Japanese government to make
efforts to enact the new legislation to extend the MSDF refueling
mission. The US deems as its final reply the statements it compiled
after detailed checking of the records in response to a request from
the government and the ruling camp.

US Ambassador visits Kantei

US Ambassador to Japan Schieffer called on Prime Minister Yasuo
Fukuda at his official residence (Kantei) yesterday and said: "We
expect Japan will continue the MSDF refueling operation. To that
end, we would like to offer cooperation as much as possible." The
prime minister, however, indicated a possibility that the refueling
mission might be suspended temporarily, saying: "Since we must
establish a new law, the operation might be briefly suspended."

The US has denied the allegation of diversion of MSDF-provided oil
for use in the Iraq war. The ambassador categorically said to
reporters after meeting with Fukuda: "None of Japan's fuel has gone
to Iraq." However, it is indeed difficult to track how all the fuel
was used.

A statement issued by the Department of Defense on October 18 noted
that we "believe" that MSDF-provided fuel was not used for other
purposes than Operation Enduring Freedom (OEF) in Afghanistan. The
statement thus denied the alleged diversion but also admitted the
difficulty of tracking the use of all fuel.

As the reason for the difficulty, the statement cited: "The fuel is
not separated from other fuel and put in a different tank." Many
observers see this response as natural in view of military common
sense.

To respond to inquiries from Japan about specific cases, the Defense
Department investigated even past refueling cases. There was
dissatisfaction in the government at a continuation of such work in
the future.

Possible effect on alliance

The latest statement issued eight days after the first one includes
comprehensive contents, indicating the US government's desire to put
an end to the diversion issue. There reportedly is an atmosphere in
the US Defense Department expecting Japan to enact the new law in
return for the US' efforts to carry out the complicated work. The
ball is now in Japan's court.

(3) Former Defense Agency's bidding for chemical disposal technology
delayed due to senior vice-foreign minister's pressure to adopt
costly Foreign Ministry formula

SANKEI (Top play) (Abridged slightly)
October 22, 2007

In 2003, then Defense Agency was in the process of determining a
technology for disposing of the abandoned chemical weapons lying on
the seafloor in Kanda Town, Fukuoka Prefecture. But the planned
bidding for determining the method was delayed by one month due to
intervention by the then senior vice foreign minister. Around that
time, preparations were underway for a Foreign Ministry-led project
to dispose of chemical weapons abandoned in China by the Imperial
Japanese Army at the end of World War II. The trouble was triggered

TOKYO 00004925 004 OF 009

by the Defense Agency's attempt to adopt a technology different from
that of the Foreign Ministry's project. A consulting firm engaged in
the chemical disposal project in China was found to have received
huge profits from official contracts by padding bills. Behind the
scandal lies the opaqueness of the Chinese project that was far
costly than the Japanese project.

In October 2003, the Defense Agency Defense Operations Division,
which was responsible for the planned competitive bidding for the
Kanda Town chemical weapons disposal project, was troubled by
repeated calls from a certain lawmaker that started about a month
earlier. The caller came from then Senior Vice-Foreign Minister
Tetsuro Yano, a House of Councillors member of the Liberal
Democratic Party.

On the phone, Yano always said: "It is absurd for the Defense Agency
not to use the formula adopted in the chemical disposal project in
China." Representing the Defense Agency, the bureau chief and other
officials responsible for the project called on Yano to brief him on
the agency's process, but the agency was eventually formed to
postpone the tender.

In order to disable old chemical weapons, ammunition must be
dismantled, which can be done by means of: (1) heating blasts, (2)
controlled blasts, (3) breaking up, or (4) cutting them up.

In FY1999, a China chemical weapons disposal office was established
in the Cabinet Office under the leadership of the Foreign Ministry.
Research study was left mainly to the hands of the Japan Institute
of International Affairs (JIIA) affiliated with the Foreign
Ministry. In the spring of 2003, an agreement was reached with China
on a plan to mainly use the heating blast method. Over 17 billion
yen had been poured into this research study over a five-year
period.

Meanwhile, research and study on the Defense Agency-led Kanda Town
project was commissioned to the Security Research Institute (Anzen
Hosho Kenkyujo) through the open tender. As are result of field
studies in five Western countries, three methods were proposed. In
the summer of 2003, the Defense Agency drew up a plan to build a
disposal plant using the controlled blast formula after hearing
views at the evaluation committee composed of external experts and
others. The Defense Agency's research and study cost came to less
than 50 million yen.

The research costs were 17 billion yen against and 50 million yen.
An estimated 700,000 gas shells were buried in China against 580
shells (later the estimation was increased to 4,000 shells) in Kanda
Port. There were some other differences between the two sites, such
where they were buried, underground or underwater. The lack of
clarity of the budgetary steps taken by the Foreign Ministry were
pointed out, even all those factors were taken into consideration.

In his repeated telephone calls to the Defense Agency, Yano demanded
an explanation, saying, "The conclusion was reached to use the
heating blast formula through talks with the Chinese government. The
Defense Agency should make a decision by respecting that
conclusion."

Troubled by Yano's calls, the Defense Agency asked a former Defense
Agency Technical Research and Development Institute weapons expert,
who was a member of the Kanda Port disposal project committee, to

TOKYO 00004925 005 OF 009

deal with the lawmaker. As a result, the Defense Agency was able to
conduct the bidding without changing the plan in November that year,
a month behind schedule, with the project awarded to Kobe Steel,
Ltd.

In disposing of chemical weapons, any method would require building
a large plant resembling a nuclear reactor and the improvement of
infrastructure, thereby drawing the keen attention of the defense
industry. All companies came forward in collaboration with Western
enterprises with their chemical disposal technologies. But in the
end, Kobe Steel, which advocated the controlled blast formula, and
JEE, which represented the heating blast method, were regarded as
most promising.

A Defense Agency source who was involved in the Kanda Port project
explained the background of the delayed bidding this way: "The
Foreign Ministry and JIIA that poured an enormous amount of money
into research and study on Chinese project took the Defense Agency's
conclusion with a small cost caused them to lose their face toward
the Chinese government."

The disposal project in China was handed from JIIA to the newly
established Abandoned Chemical Weapons Disposal Corporation in April
2006. Pacific Consultants International Group, a private-sector
construction consulting firm, is now suspected of having swindled
the government out of more than 100 million yen by padding bills for
the chemical disposal project in China.

(4) Controversy over economic policy being reignited in LDP, with
power shifting to lawmakers calling for fiscal reconstruction

NIKKEI (Page 2) (Full)
October 19, 2007

A dispute over the nation's tax and fiscal policies is being
rekindled in the Liberal Democratic Party. Under the former Abe
cabinet, former Secretary General Hidenao Nakagawa, who gives
priority to economic growth, took the initiative. Under the Fukuda
cabinet, however, lawmakers prioritizing fiscal reconstruction,
including former Chief Cabinet Secretary Kaoru Yosano and Policy
Research Council Chairman Sadakazu Tanigaki, are taking the lead in
debate. Fearing that his policy advocacy might be rejected, Nakagawa
has fiercely reacted. Discussion on economic policy is already
heating up before the LDP's Tax System Research Commission starts
deliberations on Oct. 25.

In an interview with the Nikkei yesterday: Yosano said: "It is
ridiculous to call for establishing a small government, which is
like advocating a night watchman state." Taking up this remark,
Nakagawa, a leader of the Machimura faction, assailed: "The idea of
creating a small government is specified in the party's new
platform. Calling it ridiculous might be taken as insulting the
party."

Under the Koizumi administration, Nakagawa served as Policy Research
Council chairman, while Yosano was state minister in charge of
economic and fiscal policy. When the Abe administration was
launched, Nakagawa assumed real power for policy making. But under
the Fukuda administration, the weight has been shifted from Nakagawa
to Yosano, who now chairs the Fiscal Reform Research Council, and
Tanigaki, who chairs the Policy Research Council.

TOKYO 00004925 006 OF 009

The presence of the Finance Ministry, which is eager to reconstruct
the nation's financial system, can be detected behind moves by
Yosano and Tanigaki. A senior economic official said: "Unlike the
former Abe administration, which was unnecessarily hostile to the
bureaucracy, the Fukuda cabinet seems to be willing to work in
cooperation with government ministries."

As if touched off by controversial remarks by Yosano and others,
debate in the party has become animated. In a press conference
yesterday, Chief Cabinet Secretary Nobutaka Machimura said: "Even if
we use only sweet words, it is uncertain whether we will be able to
win the next election," distancing himself from the
Nakagawa-advocated policy of focusing on economic growth.

Meanwhile, former Internal Affairs and Communications Minister Heizo
Takenaka, close to Nakagawa, expressed a sense of alarm about the
policy of focusing on tax increases as a means to reconstruct state
finances. He said in an article carried in the Nikkei: "For
financial reconstruction, there are two ways: a tax increase and
economic growth. I am concerned that only views favoring tax hikes
will be incorporated."

With an eye on dissolution of the House of Representatives for a
snap election, many are paying attention to whether a rise in the
consumption tax and a timetable for the hike will be specified in an
outline for tax system reform due out in December. Tax System
Research Commission Chairman Yuji Tsushima, who chairs the Tsushima
faction, only said in a general meeting of the faction: "We should
not reach a conclusion in haste. We still have a blank state."

(5) Government to launch resource diplomacy toward Africa, mulls yen
loans to Angola

SANKEI (Top Play) (Full)
October 21, 2007

The government decided yesterday to step up efforts to activate
resource diplomacy toward Africa. It is mulling the possibility of
offering yen loans for the first time to Angola, which abounds in
such natural resources as oil and natural gas. The government also
plans to resume yen loans to Madagascar, which is rich in nickel
resources. To counter China's active resource diplomacy toward
Africa through financial aid, Japan also aims to secure a stable
procurement of natural resources lying idle in the region by
expanding its assistance to Africa. The government plans to come up
with specific assistance measures in a meeting of the Tokyo
International Conference on African Development to be held in
Yokohama next May under its sponsorship.

The volume of daily oil production in Angola is about 1.4 million
barrels (in 2006). International oil majors have joined the
exploitation of oil there. Angola became a member of the
Organization of Petroleum Exporting Countries (OPEC) this January,
pushing up its status as an oil producer.

Angola has improved its repayment capability as its economy is being
headed toward growth owing to an increase in its oil income. Given
this, Japan has begun looking into providing that nation with yen
loans for the first time. Angola, however, is now engaged in
negotiations with the so-called Paris Club of creditor nations on
the issue of its debt repayment, so when prospects for a settlement
in the negotiations are opened up, Japan intends to start offering

TOKYO 00004925 007 OF 009

yen loans to it.

Japan has now suspended new yen loans to African countries because
of their low ability to repay debts, but it will promote the process
of resuming yen loans to such countries. In addition to Madagascar,
Zambia, a copper-producing country, is being cited as eligible for
Japan's yen loans.

The government further has decided to distribute approximately 27
billion yen in yen loans for a project to expand facilities at the
port of Mombasa in Kenya. Mombasa Port is defined as an important
point for goods distributions in the middle-eastern Africa. Japan
believes the project will also contribute to facilitating the
procurement of resources from its neighbors. Both sides will sign an
agreement possibly next month.

Against the backdrop of globally rising resource prices, a stably
procurement of rare metals is becoming a major challenge for Japan.
Reflecting the world paying attention to Africa as a potential
region for resource development, an official of the Ministry of
Economy, Trade and Industry said: "We would like to secure a stable
procurement of natural resources by offering yen loans" to Africa.

China is also steadily obtaining natural resources from Africa with
"huge economic aid in disregard of international standards,"
according to a financial source.

China held an international conference that brought together the
leaders of 48 African countries in Beijing in November 2006 and
pursued active resource diplomacy there.

In the TICAD in Yokohama next May Under, Japan intends to come up
with measures to assist Africa under its official development
assistance (ODA) program in an effort to strengthen diplomatic and
economic ties with African countries.

(6) Hiroshima police to demand custody of 4 US servicemen over gang
rape

ASAHI (Page 39) (Full)
October 20, 2007

A woman was recently assaulted by a group in the city of Hiroshima.
In this incident, Hiroshima prefectural police will obtain arrest
warrants for four US servicemen stationed at the US Marine Corps'
Iwakuni base in the city of Iwakuni, Yamaguchi Prefecture, on
suspicion of gang raping her. After that, the Hiroshima police will
ask US Forces Japan early next week to turn over the four under the
Japan-US Status of Forces Agreement (SOFA).

According to the investigation, the four US servicemen got to know a
19-year-old female at a dance event at a hall for rent in Hiroshima
City. The four US servicemen forced her into a car, and they drove
to another parking lot about 2 km away, where they allegedly
gang-raped her in the car at around 3:30 a.m. on Oct. 14.

The police also found that the four US servicemen left the female in
the parking lot and then drove to a restaurant in the city, where
they brought about another assault incident. The Hiroshima police
reported the incidents to USFJ. The four US servicemen were held by
the US military as they returned to the base that day, the police
said.

TOKYO 00004925 008 OF 009

The Iwakuni base's press division told the Asahi Shimbun yesterday
that four Marines were in custody at the base in connection with the
Hiroshima prefectural police's investigations. The base press
division said it could not answer whether the base would turn over
the four to Japanese police.

SOFA stipulates the status of US military personnel stationed in
Japan. In case US military personnel are in US military custody over
their off-duty or off-base crimes, police authorities will seek
arrest warrants for them and ask the US military through the
government to turn them over to the Japanese police.

Iwakuni Base is located in the city of Iwakuni. The city's mayor,
Katsusuke Ihara, met the press yesterday. "If it's true, it's very
regrettable," Ihara said when he met the press yesterday. This kind
of incident "must not happen," the mayor added. Along with the
realignment of US forces in Japan, the US military plans to move 59
carrier-borne fighter jets and others from Atsugi Base in Kanagawa
Prefecture to Iwakuni by 2014. After they are moved to Iwakuni, the
number of military personnel and civilian employees at Iwakuni Base
will increase to about 6,000, an increase of 50 PERCENT over the
base's present population. "If there is an increase in the number of
(US military) personnel, there will be a much higher risk (of
incidents)." With this, the mayor expressed his concern.

(7) Prime Minister's schedule, October 20

NIKKEI (Page 2) (Full)
October 21, 2007

11:24
Visited the Imperial Palace with his wife to celebrate the Empress's
birthday.

12:27
Met with his secretaries at the Grand Prince Hotel Akasaka to make
arrangements.

15:38
Returned to his private residence in Nozawa.

Prime Minister's schedule, October 21

NIKKEI (Page 2) (Full)
October 22, 2007

10:00
Attended a ceremony in commemoration of the 125th anniversary of
establishment of Waseda University at the university in Toyama.
Former Prime Minister Kaifu and others also attended.

12:12
Returned to his private residence in Nozawa.

(8) TOP HEADLINES

Asahi, Mainichi, and Tokyo Shimbun:
MSDF has been concealing fuel info error since 2003

Yomiuri:
PCI netted 120 million yen by padding bills

TOKYO 00004925 009 OF 009

Nikkei:
Government, ruling camp to postpone plan to use gasoline tax revenue
for general purposes

Sankei:
Senior vice foreign minister interfered in bidding for chemical
weapons disposal project

Akahata:
Chairman Shii calls for earnest antiterrorism law debate in
interview

(9) EDITORIALS

Asahi:
(1) Prohibition of long tenure for local chiefs must be left to each
municipality
(2) Bloodshed in Pakistan results from war on terrorism

Mainichi:
(1) US holds key to global economy
(2) Reform of civil servant system a test of prime minister

Yomiuri:
(1) Constitutional debate must move forward
(2) Former Vice-Defense Minister Moriya's collusive ties to defense
contractor intolerable

Nikkei:
(1) Simple and solid building authorization system necessary
(2) EU becoming flexible with new treaties

Sankei:
(1) False campaign violation charges must be eliminated
(2) Life-support treatment requires serious thought

Tokyo Shimbun:
(1) Rising food prices
(2) Tax hike argument should go hand in hand with spending cuts

Akahata:
(1) Disaster victim assistance law must be revised to swiftly fund
housing

SCHIEFFER

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