Cablegate: Daily Summary of Japanese Press 01/18/08

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SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 01/18/08

INDEX:

(1) New Vice Foreign Minister Yabunaka: Effective dialogue with

North Korea necessary (Asahi)

(2) Soka Gakkai urges New Komeito to be cautious about introducing a

permanent law to allow SDF overseas deployments (Asahi)

(3) Former Vice Foreign Minister Yachi: I failed to resolve

abduction issue (Asahi)

(4) Chief Cabinet Secretary Machimura gives special lecture on gas

tax, with pointer in hand (Asahi)

(5) Central, local governments concerned about effect of provisional

high tax rates' expiration on financial sources for road

construction (Asahi)

(6) Industrial circles worry about possible confusion in

distribution process in case of abolishment of current provisional

taxes (Asahi)

(7) Regular Diet session to open today; Inward-looking political

babble must end (Nikkei)

(8) Government trying to dodge criticism about resubmitting human

rights protection legislation (Asahi)

(9) Economic panel approves guideline on economic management aimed

at growth, focusing on environment measures (Nikkei)

(10) Nikkei economic symposium: Slowing Japanese economy: Will U.S.

stave off recession? (Nikkei)

(11) Okinawa Prefecture Environmental Impact Assessment Council

strongly calls for rewriting of plan for how to conduct assessment

of facilities replacing Futenma Air Station; More in-depth

recommendation report compiled (Ryukyu Shimpo)

(12) One month after U.S. Army sets up forward-deployed command for

1st Corps at Camp Zama in Kanagawa; Local communities concerned

about base buildup with no info (Akahata)

(13) It's unrealistic to call SDF troop dispatch based on U.N.

resolution constitutional: Japan's U.N. envoy (Akahata)

(14) Deputy Foreign Minister Kono: Focus to be on setting mid-term

goal for greenhouse gas emissions cuts at G8 summit (Yomiuri)

(15) G8 Hokkaido Toyako Summit in 2008: When will G8 leaders arrive

at New Chitose Airport? Hokkaido government in stew over

transportation, measures against aircraft noise (Hokkaido Shimbun)

(16) CIRO employee fired for info leaks (Sankei)

ARTICLES:

(1) New Vice Foreign Minister Yabunaka: Effective dialogue with

North Korea necessary

ASAHI (Page 4) (Full)

January 18, 2008

TOKYO 00000145 002 OF 020

New Administrative Vice Foreign Minister Mitoji Yabunaka said

yesterday: "An effective dialogue is needed for the North Korea

issue." Referring to the abduction issue, talks on which have been

stalled, he stated: "It is important to let that country understand

that resolving the issue will benefit it as well.

Yabunaka held yesterday a press conference and responded to

questions by media companies. As director general of the Asian and

Oceanian Affairs Bureau, he dealt with the North Korean nuclear

problem for two years from December 2002. Asked about his view on

North Korea, he said:

"Negotiations with Pyongyang are never easy. Japan has taken a

policy of giving priority to dialogue and pressure. However, we must

have an effect dialogue with that country."

With regard to the 4th Tokyo International Conference on African

Development to be held in May, and the July Group of Eight summit in

Hokkaido, Mitoji pointed out: "It is extremely important for

Japanese diplomacy to conclude the two conferences successfully." He

also stated: "It is important for Japan, China and South Korea to

cooperate over Africa assistance even though Beijing has carried out

resource diplomacy."

(2) Soka Gakkai urges New Komeito to be cautious about introducing a

permanent law to allow SDF overseas deployments

ASAHI (Page 4) (Full)

January 18, 2008

The New Komeito, the junior coalition partner of the ruling Liberal

Democratic Party (LDP), held a meeting yesterday at its headquarters

with the religious sect Soka Gakkai, its main backer. In the

session, the Soka Gakkai urged the New Komeito to carefully respond

to the idea of introducing a permanent law to allow overseas

deployments of the Self-Defense Forces, on which the religious sect

is concerned that the LDP and the largest opposition Democratic

Party of Japan (DPJ or Minshuto) might make a decision on it without

broad-based debate. New Komeito Secretary General Kazuo Kitagawa

explained his party's position: "Our party will not approve a

permanent law without public consensus."

Soka Gakkai Deputy Director Harada also asked the New Komeito to be

cautious about taking advantage of the two-thirds override vote in

the House of Representatives in enacting a bill on the budget for

2008 and its related bills after they are voted down in the House of

Councillors. He told Kitagawa:

"Although the two-thirds override vote in the Lower House, which is

stipulated in the Constitution, is a legal procedure, abusing it

should be avoided. As political parties, the ruling and opposition

camps must make efforts to reach an agreement."

(3) Former Vice Foreign Minister Yachi: I failed to resolve

abduction issue

ASAHI (Page 4) (Full)

January 18, 2008

Shotaro Yachi, who resigned as administrative vice foreign minister

yesterday, held a press briefing yesterday, in which asked about

TOKYO 00000145 003 OF 020

events he had dealt with during his tenure as vice minister, he

responded: "What I left unfinished is the abduction issue." He

described his achievements, quoting Douglas MacArthur's expression,

"The old soldier never dies, he just fades away." He became an

advisor to the Foreign Ministry as of yesterday.

He expressed bitterness, saying:

"What I left unfinished or what I failed to make achievements is

probably the abduction issue. Although there are many difficult

issues, including the Northern Territories issue, it is extremely

regrettable that results were not made on the abduction issue."

(4) Chief Cabinet Secretary Machimura gives special lecture on gas

tax, with pointer in hand

ASAHI (Page 4) (Full)

January 4, 2008

Countering the DPJ's call for abolition of the provisional gas tax

rate, Chief Cabinet Secretary Machimura in an unprecedented move

during a regular press conference yesterday gave a lecture on the

gas tax, using three panels.

He noted with a pointer in one hand: "The DPJ is claiming that

gasoline prices would drop 25 yen per liter if the provisional tax

is abolished. However, I want you to understand the problems with

the idea." He cited the following as problems: (1) a drop in tax

revenues of both the central and local governments up to 2.6

trillion yen; (2) adverse effects on the installation of guardrails

for school roads, measures for railroad crossings that rarely open,

and snow-removal; and measures to prevent global warming. In

particular, he stressed that gasoline prices in Europe are higher

than those in Japan. He said, "Would the international community see

Japan as being enthusiastic about preventing global warming if it

cuts the gasoline tax at a time when it is going to make a public

appeal on environmental issues at the G-8 summit?" He then joked,

"Perhaps the DPJ believes money will fall from the sky."

(5) Central, local governments concerned about effect of provisional

high tax rates' expiration on financial sources for road

construction

ASAHI (Page 2) (Full)

January 17, 2008

Financial sources for road constructions come from revenues from six

taxes, including the gasoline tax and the local road tax. The total

amount of annual revenues from these taxes is 3.3 trillion yen for

the central government and 2.1 trillion yen for local governments.

Of these taxes, their provisionally high rates of five taxes are to

expire at the end of March and at the end of April. If the hiked

rates expire, the central and local governments will lose revenues

of 1.7 trillion yen and 0.9 trillion yen, respectively.

Given this, the central and local governments are increasingly

concerned about the effect on their finances. In the case of Shimane

Prefecture, if the provision tax rate is removed, the 43.4 billion

yen allocated for road-construction projects in the fiscal 2007

budget will reduce to 18.8 billion yen.

Meanwhile, the Democratic Party of Japan also has come up with a

TOKYO 00000145 004 OF 020

tricky scheme. Under this, the main opposition party proposes having

the central government pay the total amount of costs for projects

under the direct jurisdiction of the central government. To do so,

however, about 600 billion yen will be needed.

(6) Industrial circles worry about possible confusion in

distribution process in case of abolishment of current provisional

taxes

ASAHI (Page 2) (Slightly abridged)

January 17, 2008

In a press conference yesterday, Petroleum Association of Japan

Chairman Bunmei Watari, chairman of Nippon Oil Corporation, said:

"It is imprudent even to think about the premise of expiration of

the current provision tax rates. I am not considering any measures,

assuming such a case, at the present point of time."

If the provisional high gasoline rate expires, the current regular

gasoline price, now at about 155 yen per liter, will drop by 25 yen.

This change will benefit drivers, but executives in the petroleum

industry are worried about possible confusion in the process of

distribution.

Since the gasoline tax is imposed at the stage of shipment, even if

the high rate is to expire on April 1, the current rate will be

applied to all gasoline to be shipped by the end of March. This

means that consumers will find different prices for gasoline

marketed at the same time due to differences in shipment timeframe.

In the case of diesel oil, though, the tax is imposed at the stage

of marketing. Once the high rate expires, high-rate diesel oil will

no longer be placed on the market.

A petroleum company executive complains: "If the government does not

formulate and distribute guidelines to drivers to let them know what

will change (if the high tax rates are not maintained), we will not

be able to cope with the situation."

If the ruling camp's bill is enacted in April or later, "the low tax

rate" will be applied for a short period of time. In such a case,

there may be a last-minute rise in demand.

If gasoline is out of stock, drivers might think that

refiner-marketers are unwilling to sell low-priced gasoline.

Adversely, there may be a case in which many consumers avoid

purchasing gasoline before and after the rate is lowered.

Some voice concern about the negative effect of an abolishment of

the current provisional tax rates on the environment. According to

the research group of the National Institute for Environmental

Studies, assuming that fuel prices drops by about 20 PERCENT as a

result of discontinuation of the current high gasoline and diesel

fuel tax rates, carbon dioxide (CO2) emissions may increase about 8

million tons annually on average during the period between 2008 and

2012.

(7) Regular Diet session to open today; Inward-looking political

babble must end

NIKKEI (Page 1) (Excerpts)

January 18, 2008

TOKYO 00000145 005 OF 020

The divided Diet is now set to enter the hardest stage yet:

deliberations on the fiscal 2008 budget bill. At the worst timing,

the Japanese economy has been hit by the global financial woes

resulting from America's subprime loan crisis.

DPJ holds the key

Although a budget bill can clear the Diet with the power of the

House of Representatives alone, if budget-related bills are rejected

by the House of Councillors, they must be readopted in the Lower

House by two-thirds overriding votes. But the Lower House stands on

equal footing with the upper chamber when it comes to key government

posts that require Diet endorsement, meaning the Bank of Japan

governor cannot be determined without cooperation between the ruling

parties and the main opposition Democratic Party of Japan (DPJ or

Minshuto).

The fate of Diet deliberations could be determined by the DPJ, the

largest party in the Upper House. In the previous extraordinary Diet

session, a personnel appointment bill was rejected in the Upper

House for the first time in 56 years. Major confusion in selecting a

successor to BOJ Governor Toshihiko Fukui would deal a blow to the

financial market, which fears an unstable political situation.

A number of bills, including one amending the Special Taxation

Measures Law governing the provisional tax rates on gasoline and

other things must be enacted by the end of March so as not to hamper

the revenues of the central and local governments. The DPJ contends

that the price of gasoline will drop 25 yen per liter with the

abolition of the provisional tax rates. The matter is not that

simple. The party needs to present solid financial resources logic

to support it.

An idea is circulating in the DPJ not to take a vote on the bill in

March in the Upper House with the aim of invalidating the

provisional tax rates temporarily. It is the Diet's responsibility

to reach a conclusion within a given fiscal year. The DPJ's posture

of maneuvering for its own interests is unacceptable.

Prime Minister Fukuda's responsibility is also heavy. In a Nikkei

opinion poll in January, the rates of support and non-support for

his cabinet stood at 42 PERCENT and 46 PERCENT , respectively, with

the non-support rate outpacing the support rate for two consecutive

months. Since assuming office last September, Prime Minister Fukuda

has yet to present a clear national vision. His management of the

administration lacks speed under heavy pressure from the divided

Diet. Discontent with his leadership has also been preventing Fukuda

from painting a picture of buoying up his administration.

The political battle in part comes from different desires for Lower

House dissolution. With a view to regime change, the DPJ is focused

on this spring when the budget-related bills will be handled and the

question of pension mismanagement is likely to become a breach of

the campaign pledge. The prime minister, on the other hand, has

expressed his desire to dissolve the Lower House after the G8 Lake

Toya Summit in July.

Reforms must be carried out

In order to enact the budget-related bills by the end of March, the

prime minister must seek DPJ President Ozawa's cooperation with a

TOKYO 00000145 006 OF 020

determination to dissolve the Lower House, if necessary. The pension

and taxation systems must be reformed fundamentally regardless of a

fear of an election.

This year, South Korea will have a new president and the

presidential election will also take place the United States. It is

desirable for the LDP and DPJ to come up with their respective

manifestos (campaign pledges) clearly specifying their policies

regarding pension reform and other matters and receive the people's

verdict at an appropriate time.

If the Lower House is dissolved and the ruling bloc wins a majority

as a result, chances are that the ruling camp would lose a

two-thirds majority that can override Upper House rejections of

bills. Looking at the period beyond the next Lower House election,

calls for forming a grand coalition between the LDP and DPJ and for

political realignment are likely to continue simmering at the bottom

of in the political community.

In 1993, the so-called 1955 framework, symbolized by the LDP

dominated system dating back to 1955 when the party was formed,

collapsed, and the non-LDP Hosokawa administration was launched. The

political world remained in turmoil until the Murayama

administration was launched in 1994 by the LDP, Social Democratic

Party of Japan, and Sakigake (Harbingers). In the political season

after the bursting of the bubble economy, a sense of alarm regarding

the country's economy was weak.

The Hosokawa administration's one of the economic challenges was to

ease the land tax system, but it did not go any further than a

limited review due to stiff opposition of the SDPJ and other parties

that insisted that the bubble economy would flare up again.

It was only one example of a delayed measure by the government.

Japanese politics might again follow the wrong path unless it puts

an end to the inward-looking political battle and come up with solid

and correct measures to deal with the economic situation.

The first regular Diet session under the Fukuda administration opens

today with four government speeches, including Prime Minister

Fukuda's policy speech. The session will run for 150 days through

June 15. Interpellations are expected to take place on Jan. 21-23.

(8) Government trying to dodge criticism about resubmitting human

rights protection legislation

ASAHI (Page 3) (Excerpts)

January 18, 2008

Human rights protection legislation was scrapped in 1993. A move is

underway in the government and ruling parties to submit a renewed

bill to the regular Diet session that opens today. The bill that

originated from antidiscrimination measures and that includes

contents transcending the original ideals, such as media

regulations, has drawn objections from conservative members in both

the Liberal Democratic Party and opposition parties. Proponents in

the LDP and the Justice Ministry are eager to review the contents

with the aim of obtaining the support of the two sides.

"Not many bills are hated to this extent by both the right- and

left-wing groups. In order to win their support, the splinters must

be removed," a Justice Ministry official studying the new bill

TOKYO 00000145 007 OF 020

said.

The scrapped old bill drew objections from both the conservatives

fixated on Japanese traditions and culture and those proponents of

giving consideration to human rights organizations.

To the LDP conservatives, the definition of human rights violations

and the nationality clause are the particularly irritating

splinters. The group to protect tradition and culture, composed of

junior members and chaired by Lower House member Tomomi Inada, is

studying an opposition position paper focused on those two points.

The old bill specified concrete cases subject to the special relief

procedures applicable to serious human rights violations. It also

specified that the voluntary general relief measures were applicable

to humanitarian rights violations in general.

The conservative group criticized the definition of human rights

violations was vague. The Justice Ministry is considering listing in

the new bill specific cases subject to the general relief measures.

"Although human rights violations cannot be defined, presenting

specific types would help dispel the concern that the scope would

expand endlessly," a senior member said.

The old bill also did not specify nationality for the regional human

rights counselors that number about 20,000 nationwide. The

conservative group, with the General Association of Korean Residents

in Japan (Chongryon) in mind, condemned the bill, saying that it

might end up increasing the influence of special groups. The

government and ruling parties have presented a policy to specify

nationality as residents with the right to vote for municipal

assemblymen, a substantial step to limit to Japanese nationals.

Asked about this review, one said: "Foreigners would be allowed to

serve as counselors. The significance of the legislation would be

become weaken." At the same time, there is deep-seated opposition to

granting suffrage to foreign residents to allow them to become

counselors.

Also under study are plans to insert the wording that relief

measures are not subject to religious and historical problems and to

protect those received complaints.

Elimination of media regulations under study

The DPJ clearly opposed the old bill due to media regulations.

The bill included a clause allowing the government to take special

relief measures against media violations of human rights of crime

victims and others. The clause drew fire that it might end up

restricting the media's news-gathering activities, and the ruling

bloc decided in 2005 to freeze it until an implementation date is

determined under a separate law.

Further, the government and ruling camp began studying eliminating

the clause altogether, thinking that it would be unfrozen someday.

The opposition camp, which wants to swiftly enact the legislation

based on the removal of the media regulations, has also begun

showing signs of softening its stance. A DPJ lawmaker responsible

for the matter said: "Human rights issues must not be politicized.

We could go on complaining about specifics, but first of all we need

TOKYO 00000145 008 OF 020

to implement the new system." The DPJ criticized the option of

establishing a human rights committee in the Justice Ministry's

external organ as surveillance by power. Reversing its stance, the

largest opposition party plans to approve it based on a condition

that it be reviewed in five years.

For this reason, once a new bill is submitted to the Diet, it is

likely to be enacted.

(9) Economic panel approves guideline on economic management aimed

at growth, focusing on environment measures

NIKKEI (Page 5) (Full)

January 18, 2008

The government's council on economic and fiscal policy approved a

mid-term guideline on economic management in its meeting yesterday.

Given the recent sluggish growth of wages and consumption, as well

as the delay in recovery of small companies' business performance,

the panel also decided to hammer out a new strategy by this spring

to keep the nation's real economic growth rate at more than 2

PERCENT . For a new strategy, private-sector members made a number

of proposals, but many of them lack specifics, giving no clear

roadmap to turn into practice.

The keywords in the mid-term report as a new growth strategy are

"connective power and environment power." This expression reflects

Prime Minister Fukuda's policy of pursuing "independence and

coexistence." In the meeting, the prime minister said: "I want the

panel to also keep in mind that our policy will be dispatched to the

international community when it maps out a new strategy." With an

eye also to the July Lake Toya Summit, in which environmental issues

will take center stage, the panel will work out specific measures.

A private-sector member said: "It is necessary for Japan to make a

strong showing." He meant that Japan should make use of its

superiority in the environment and energy-conservation areas, such

as the production of hybrid cars and plant management whereby

hazardous materials are not released, in order to promote its

economic growth.

Regarding connective power, a private-sector member proposed

improving medical and nursing services. Given that the nation is

turning into aging society with a declining birthrate, this proposal

is aimed to create a new market by easing regulations in the nursing

and daycare service areas and encouraging private entities to enter

the business. As measures to enhance productivity at small

businesses, one member suggested that a tie-up between different

types of business will lead to improvement in their corporate

values.

But a roadmap to implementing the proposed measures is nowhere in

sight. Included among the proposals made for the environment area

are those to develop a new material that uses less energy and to

install more solar panels at public facilities, and they are nothing

new. It is not specified how the aid for Asian countries in the

energy sector should be connected to Japan's economic growth.

The proposed measures to deal with the ongoing economic

globalization seem to be just desk ones and are difficult to put

into practice. The guideline proposes introducing a training system

to accept high-skilled foreign trainees, but no timeframe and other

TOKYO 00000145 009 OF 020

specifics are not included. The guideline also refers to economic

partnership agreements (EPA) with Australian and the United States,

but a person related to the advisory panel grumbled: "With no

specific roadmap, that is a strategy without strategy."

Discussion has already been conducted on agricultural reform at an

expert committee of the advisory panel, but the mid-term guideline

does not refer to this theme. The issue of decentralization, which

is viewed indispensable to revitalize local communities, is not

taken up, either.

Prime Minister Fukuda gives priority to consumer affairs

administration. Reflecting this, the guideline notes: "Consumer

affairs administration should be reformed from its foundation" as

one of the tasks for this year. The prime minister also said: "I

want you to discuss future options for consumer affairs

administration."

In response to the ongoing global-scale financial market turmoil,

the panel also agreed to set up an expert body tasked with analyzing

in detail the world and Japanese economic structures.

(10) Nikkei economic symposium: Slowing Japanese economy: Will U.S.

stave off recession?

NIKKEI (Page 3) (Excerpts)

January 18, 2008

Yoshikawa - risks stemming from soaring crude oil prices will become

clear; Harada - drop in housing starts will affect employment;

Kojima - wage should be raised to shift income to household sector;

Okuda - consumers will increasingly exercise thrift

Nihon Keizai Shimbun (Nikkei)and the Japan Center for Economic

Research yesterday held a New Year economic symposium at Nikkei Hall

in Otemachi, Tokyo. Participants unanimously agreed that the

Japanese economy is gradually slowing down due to the sinking U.S.

economy, soaring crude oil prices and a decline in investment in

housing. A cautious view was prevalent about the future of the

economy. Participants also agreed that the U.S. economy, the focus

of attention, would slow for sometime to come, but a recession could

be avoided with the Federal Reserve Board (FRB) raising interest

rates.

-- Disturbing factors, such as the issue of subprime loans for

individuals with low creditworthiness and the soaring crude oil

prices, are increasing.

Yoshikawa: The U.S. and the Chinese economy, high crude oil prices

and exchange rates have been pointed out as risk factors. Of the

three, a yellow light has been flashing on and off on the U.S.

economy. But now, a red light is flashing on. As risks became

obvious, we have no other choice but to become more cautious in

projecting the future of the Japanese and global economies.

Okuda: Personal consumption has been sluggish since last summer. The

abolition of a fixed-rate tax break and the transfer of tax revenue

resources have increased a sense of tax burden. An increasing number

of consumers are tightening their purse strings with prices of daily

necessaries going up as a result of soaring crude oil prices. We

will have a considerably severe year this year.

TOKYO 00000145 010 OF 020

Harada: The subprime loan issue originates in the U.S., and yet,

the scope of the fall of Japanese stocks is greater. Domestic

companies have increased profits mainly because they raised profit

shares. Profits gained by enhancing added value are small. The

housing sector is in a slump following the amendment to the

construction standards law. Distrust in Japan is reflected in stock

prices.

Kojima: GDP's dependence on foreign demand was about 10 PERCENT in

2002, but the ratio now has risen to about 15 PERCENT . If the U.S.

economy slows sharply, the global economy would inevitably lose

steam as well. The Japanese economy, which has grown, relying on

exports, will require significant adjustment.

-- How do you see the domestic economy, close to home?

Okuda: Small- and medium-sized companies' business confidence is

bad. Since it is difficult for them to shift a rise in the prices of

raw materials to sales prices, a performance gap with major

companies is widening. Compared with urban areas, where major

companies are concentrating, sales of department stores in regional

areas are sharply dropping.

Harada: One reason for the sluggish labor income is a housing

recession. The impact of the housing recession on employment of

construction workers is significant. However, since demand for

houses and building has not declined, positive effects would appear,

once the situation gets back to normal.

Yoshikawa: The point is personal consumption. It accounts for 60

PERCENT of GDP. However, personal consumption has grown only 1

PERCENT . Upgrading part-timers to a permanent status holds the key.

Another point at issue is the movement of wage hikes, which an

increasing number of business leaders have begun to accept.

Kojima: The household income has continued to fall with income

shifted to the corporate sector. Corporate profits have reset a new

high. I think companies that can afford should raise wages, looking

ahead. An increase in family income would lead to sustainable

consumption, albeit mild.

-- What about overseas economies?

Harada: China's domestic demand is important. Unlike Japan, there is

actual demand for public works in China. Some are concerned about

the Chinese economy after the Beijing Olympic Games in August. There

are not so many public works related to the Olympic Games, compared

with the total number of overall public works. No recession would

come after the Olympic Games.

Kojima: Growth of the U.S. economy would be no more than 1 PERCENT

-2 PERCENT . However, once major adjustment is over, it could grow

again next year. Demand for the construction of infrastructure is

brisk in China, India and the Middle East. It will serve as a plus

factor for the global economy.

Yoshikawa: The U.S. will presumably cut interest rates again.

However, since the housing sector, where demand is expected to

increase as a result of an interest rate cut, has already suffered a

blow, monetary easing might not produce effects.

Okuda: There will remain a risk of the U.S. economy losing steam. If

TOKYO 00000145 011 OF 020

investment in housing declines, consumption of housing-related

goods, such as domestic houseware, would drop. The end-of-the-year

sales in the U.S. significantly declined. Discount stores are doing

well, but department stores and clothing stores are suffering a

decline in income.

-- What about an outlook for a real growth rate and Nikkei Stock

Average?

Yoshikawa: It would be difficult for the Japanese economy to attain

2 PERCENT growth. I would say that a real growth rate would be 1.8

PERCENT or so.

Okuda: I would say 1.3 PERCENT for fiscal 2007 and 1.5 PERCENT for

fiscal 2008. Stock prices would be between 13,000 yen and 16,000

yen.

Harada: My projection is that a growth rate for fiscal 2007 would be

1.5 PERCENT and 2 PERCENT for fiscal 2008. Stock prices at the end

of the year would be 17,000 yen.

Kojima: In my view, a growth rate for fiscal 2007 would be 1.3

PERCENT and around 2.0 PERCENT in fiscal 2008. Yen exchange would

be between 100 and 110 against the dollar.

Participants:

Akira Kojima: Chairman of the Japan Center for Economic Research

Yutaka Harada: Chief economist at the Daiwa Institute of Research

Tsutomu Okuda: President and CEO of J. Front Retailing

SIPDIS

Hiroshi Yoshikawa: Professor at Tokyo University

(11) Okinawa Prefecture Environmental Impact Assessment Council

strongly calls for rewriting of plan for how to conduct assessment

of facilities replacing Futenma Air Station; More in-depth

recommendation report compiled

RYUKYU SHIMPO (Page 1) (Full)

January 17, 2008

In response to the governor's commission, Okinawa Prefecture's

Environment Impact Assessment Council (chaired by Masamitsu

Tsukayama, honorary professor at Ryukyu University) has been

SIPDIS

examining a plan to recover land from the sea included in the

government notice specifying the outline of environmental impact

assessments on the construction of facilities replacing the U.S.

forces' Futenma Air Station. The panel on the evening of Jan. 16

held its second meeting at the prefecture's Welfare Center of the

Prefecture. Participants mapped out a recommendation report that

seeks reexamination of environmental assessments of reclamation of

the sea area in question, mentioning that the plan should be

rewritten at the present stage, where specifics of the construction

project can be assumed to some extent. The panel in its

recommendation report on the assessment of the construction of an

airfield, issued in December last year, employed the wording

"Research for environmental assessments should be conducted, once

specifics of the project have been decided to some extent." The

report this time employed more in-depth wording than that.

Policy report to be submitted to governor tomorrow

The panel will submit the report to the governor on the 18th. The

TOKYO 00000145 012 OF 020

report calls for measures to preserve the environment when

conducting assessments of barrack relocation work following the

construction of alternative facilities and extracting soil used to

recover land from the sea.

When the panel deliberated on the draft report on the 16th, the

notice carried only seven pages for the purpose and specifics of the

project. However, 150 pages of additional data were later provided.

The Okinawa Defense Bureau has thus revealed new facts each time the

panel asked for explanations, drawing a flurry of criticism as

disrupting the original procedures for inviting opinions on the

project plan from residents, by letting them know its details.

In view of such a situation, one panel member said, "It would be

most desirable to let the government undergo the procedures once

again." However, the prefecture's environmental policy division took

the stand that in terms of the interpretation of the assessment law,

it would be difficult to have the plan rewritten in such a way as

to give it legally binding power,.

However, some panel members strongly called for the rewriting of the

plan, whether it will have legally binding power or not. They

proposed that examination procedures similar to the method of

letting residents know details of the plan, including inviting

opinions from persons sitting in the public gallery during open

examinations, should be taken. As a result of efforts to explore a

method of having the plan written so that the Defense Bureau will

not start the project without considering objections, participants

agreed to directly mention in the panel's report their request for

rewriting the plan.

Regarding the reexamination of the environmental assessment and

construction project plan, Environmental Policy Division Director

Hiroshi Shimoji revealed his perception that he assumes that

explanations, including an investigation method matching the

specifics of additional data of as many as 150 pages, should be

provided in a manner that can convince the panel and the

prefecture.

(12) One month after U.S. Army sets up forward-deployed command for

1st Corps at Camp Zama in Kanagawa; Local communities concerned

about base buildup with no info

AKAHATA (Page 4) (Full)

January 17, 2008

The U.S. Army has now set up a forward-deployed command for its 1st

Corps, also known as I Corps ("eye core"), at Camp Zama, a U.S.

military base straddling the cities of Zama and Sagamihara in

Kanagawa Prefecture. The new command will now see its first full

month on Jan. 19. The U.S. Army is now steadily building up its base

functions without providing sufficient information to local

communities. There is also something unknown about the new command's

scale and task.

"We're developing our operational capabilities that differ from the

control capabilities we have had here." With this, I Corps Commander

Jacoby, posted to the U.S. Washington State city of Fort Lewis,

explains the forward-deployed command and its nature in an

electronic version of the Stars & Stripes dated Dec. 21, 2007.

In 1995, the U.S. Army abolished the headquarters of its 9th Corps

TOKYO 00000145 013 OF 020

(IX Corps), which used to keep tabs on the Korean Peninsula for a

potential emergency. Since then, Camp Zama has only functioned as a

base with control capabilities, namely logistics, and welfare for

GIs.

With the forward-deployed command's establishment, Zama has now

become a linchpin of the U.S. Army's war command again and liaises

with I Corps that is ready to send 100,000 troops to the

Asia-Pacific region.

Moreover, the I Corps forward-deployed command at Zama is a combat

command that is "modernized to meet the world situation," according

to Public Affairs Officer Crawford at the headquarters of U.S. Army

Japan.

According to the U.S. Department of Defense's budget for fiscal

2008-2009, the U.S. Army plans to upgrade the "Sensitive

Compartmented Information Facility" (SCIF) at Zama. In addition, the

U.S. Army also plans to build a "combat command training center" on

the neighboring premises of Sagami Depot, starting construction work

in March 2009.

However, the government has not provided local communities with

sufficient information about these functional buildup plans.

On Jan. 15, Sagamihara City held a meeting of local residents to

promote the reversion of U.S. military bases. One participant there

voiced concern about a base buildup with no local consent. "I will

strongly request the government to provide information," Sagamihara

Mayor Toshio Kayama said in the meeting.

Meanwhile, there is also something unclear about the new Zama

command.

At first, the Defense Ministry explained that the new command would

be staffed with about 300 personnel. In December last year, however,

the Defense Ministry said the new command would be staffed with

about 90 personnel by September 2008 and that the U.S. Army was

studying what to do about the new command's staffing after that.

The U.S. Army is also planning to deploy 300-400 military vehicles

to Camp Zama and Sagami Depot. However, the Defense Ministry says

the plan has yet to be finalized at this point.

Fort Lewis-where I Corps is headquartered-has sent troops to Iraq

since 2003. There are still several thousand troops in Iraq from

Fort Lewis. With the Iraq war being protracted, I Corps headquarters

is now troubled in its operation before reinforcing its

forward-deployed commands.

Furthermore, there is also something unknown about the new command's

task. The U.S. Department of Defense, in its budget program,

explains that the buildup of U.S. Army Japan is linked to a global

bottom-up review of the U.S. military presence (U.S. military

transformation). Zama is an advance position of the U.S. Army for a

global antiterror preemptive war. This is the Bush administration's

initial goal, and there is no change in this

However, this Bush strategy has fallen through. The future course of

the United States' antiterror war is invisible. There are also

changes in the Korean Peninsula situation, such as dialogue between

the United States and North Korea. Meanwhile, the United States

TOKYO 00000145 014 OF 020

needs to look strong against China, according to a U.S. Army Japan

source.

Japan and the United States are now certain to integrate their

military forces.

"I Corps has done a number of training exercises with the Ground

Self-Defense Force. From now on, we will also be able to develop our

relations with them throughout the year, not only to conduct

training exercises." With this, Jacoby stressed that the U.S. Army

would step up its cooperation with the GSDF's Central Readiness

Command, which will move its headquarters to Zama by fiscal 2012.

(13) It's unrealistic to call SDF troop dispatch based on U.N.

resolution constitutional: Japan's U.N. envoy

AKAHATA (Page 4) (Full)

January 18, 2008

Jiji Press, New York

Japanese Ambassador to the United Nations Yukio Takasu spoke to a

Jiji Press seminar in New York City on Jan. 15. In his speech there,

Takasu indicated that it is unrealistic to conclude that sending

troops from the Self-Defense Forces on an overseas mission-if that

is based on a U.N. Security Council resolution-does not conflict

with the Constitution's Article 9, which prohibits Japan from using

armed force overseas.

Takasu cited peacekeeping operations (PKO) as U.N. activities that

are based on a UNSC resolution. He said, "This includes tasks to be

conducted along with military operations to a considerable extent."

He added, "It is not realistic to say this does not correspond to

the use of armed force stipulated in Article 9.

(14) Deputy Foreign Minister Kono: Focus to be on setting mid-term

goal for greenhouse gas emissions cuts at G8 summit

YOMIURI (Page 4) (Full)

January 18, 2008

The main topics of discussion at the Group of Eight summit that

Japan will host in July in Hokkaido will be such political issues as

the environment, climate change, support for African development,

and nuclear nonproliferation. The global economy will be another

major item on the agenda at the G8 summit. I am sure that

Afghanistan and Pakistan will be taken up as regional issues. Many

prominent figures such as national political leaders and top

business leaders from the world will attend the annual meeting of

the World Economic Forum (WEF or Davos Conference), which will start

on Jan. 23. The participants are wondering what this year's G8 host

country will talk about. Prime Minister Yasuo Fukuda will send

messages responding to their expectations. Japan will kick off the

G-8 summit at the WEF meeting.

On the climate change issue, the highlight of the Summit is how to

set a mid-term goal for cutting greenhouse gas emissions in a

post-Kyoto Protocol international pact. In that regard, the G8

shared the same view in the first Sherpa meeting held this month.

The unprecedented heated discussion was held in the two-day Sherpa

meeting.

TOKYO 00000145 015 OF 020

Until July, Japan wants to link the G8 debate and the America-hosted

conference of major emitters. Linking the two discussions is

important because China is a member of the conference.

The U.S. will host the next meeting of the major emitters in late

January in Honolulu, and it is also expected to hold monthly

meetings. Washington is trying to consider the issue of setting a

mid-term goal in a responsible way.

Although the United Nations is the main venue to discuss climate

change, the Japanese government wants to make the upcoming G8 a

springboard for creating a mid-term goal. If the G8 fails to reach a

consensus, clashes of opinions will become more serious at the UN.

Therefore, Japan assumes a heavy responsibility.

(15) G8 Hokkaido Toyako Summit in 2008: When will G8 leaders arrive

at New Chitose Airport? Hokkaido government in stew over

transportation, measures against aircraft noise

HOKKAIDO SHIMBUN (Page 27) (Full)

January 17, 2008

The Hokkaido government and municipalities affected by the Group of

Eight (G8) industrialized countries summit conference in Lake Toyo,

Hokkaido (G8 Hokkaido Toyako Summit) are fretting about when the G8

leaders will arrive at New Chitose Airport, Hokkaido, and whether

they will arrive late at night or early morning. If they arrive late

at night or early morning, one problem is how to transport them.

Moreover, in order to deal with airplane noise if landing slots from

10:00 p.m. through 07:00 a.m. are set, it is necessary to discuss

the noise issue with local residents. Given the past discussions

between the Hokkaido government and residents on the noise problem,

it is difficult to forecast whether they can reach a conclusion if

they hold discussions.

According to the Hokkaido government's G8 Summit Promotion Bureau,

as of Jan. 16, no information about the schedule showing arrivals

and departures of the G8 leaders has been released by the Ministry

of Foreign Affairs' (MOFA) G8 Summit Preparation Office.

In the case of the 2000 G8 Okinawa Summit, all G8 leaders arrived in

Narita Airport instead of small Naha Airport. So no problem

occurred. But given New Chitose Airport's broad aircraft parking

apron, it is expected that some G8 leaders will directly arrive in

New Chitose Airport, says an official at the Hokkaido government's

Summit Promotion Bureau.

The bureau is consulting with MOFA ways to transport G8 leaders, if

they arrive in the airport daytime, to the area near the G8 Summit

venue Windsor Hotel Toya by carrying them by helicopter from the

airport to Lake Toya. However, no consultations have been held

concerning what to do about arrivals or departures late at night or

early morning. Depending on circumstances, G8 leaders may be asked

to stay one night at a hotel near the airport.

Another major pending question is related to the agreement made with

residents. Regarding arrivals and departures late at night and early

morning in New Chitose Airport, the Hokkaido government and the

governments of Chitose City and Tomakomai City agreed on six

departure-and-arrival slots a day. These slots are always all used

by cargo and passenger planes. The Hokkaido government's G8 Summit

Promotion Bureau said that now is not the right time to hold

TOKYO 00000145 016 OF 020

discussion with residents, but it added that it may seek residents'

understanding toward creating special landing slots.

Residents, however, are nervous that the agreement might be turned a

mere scrap of paper, given that during last year, there were nearly

300 landings after 10:00 p.m. because of equipment trouble and

unseasonable weather. Residents still harbor the ill feeling toward

the Hokkaido government over the question of whether to extend the

airport runway.

Hidenori Niwa, chair of the Uenae Block Association in Tomakomai

City, noted: "In terms of national interests, I feel it necessary

for us to show understanding toward creating special landing slots

if they are necessary. But (the Hokkaido government) tends to ignore

the voices of residents. I hope the Hokkaido government will fully

exchange views with residents so that they can convey their views to

the central government."

In the case of the Okinawa G8 Summit, it was four months before the

G8 Summit that none of the G8 leaders would arrive directly in Naha

Airport. The Hokkaido government's Summit Promotion Bureau noted

that given the need to hold discussion with residents, we need to

know early..., until spring...."

Hotel employees enthusiastic about learning English conversation

Noboribetsu Onsen

The Noboribetsu Grand Hotel (at Noboribetsu Onsen Town in

Noboribetsu City), which has been informally chosen as

accommodations for the U.S. government delegation, offer its

employees an English conversation class.

Since last fall, when the United States inspected the hotel, the

hotel side has held the English conversation class for its 100 or so

employees working at the reception desk and gift shops. After the

hotel was chosen as a facility to accommodate the U.S. delegation,

the English conversation class has focused on practical expressions.

The teacher of the class is Managing Director Yutaka Fukushima, who

has worked for an overseas hotel for eight years.

On Jan. 16, nine employees attended the class, which was held at a

karaoke room in the hotel. In the one-hour class, Fukushima played

the role of a visitor and taught employees how to respond to a

visitor who lost his wallet in a dressing room or how to explain to

a visitor the way to go to Sapporo. Aika Saito (20), who has

attended every class, said with enthusiasm: "I want to study hard

English so that I can respond well to visitors from the United

States." The class will continue just before the start of the G8

Summit.

(16) CIRO employee fired for info leaks

SANKEI (Page1) (Abridged)

January 18, 2008

Chief Cabinet Secretary Nobutaka Machimura took disciplinary action

yesterday under the National Public Service Ethics Law to discharge

a 52-year-old employee of the Cabinet Intelligence and Research

Office (CIRO or Naicho for short) for receiving money from a member

of the staff of the Russian Embassy in Japan in return for providing

information. This is the first disciplinary dismissal of a CIRO

TOKYO 00000145 017 OF 020

employee since the organization was established in 1986. The prime

minister's office (Kantei) has just taken the initiative to enhance

the counterintelligence setup of central government offices. In

addition, the Kantei has also set up a panel to reform the Defense

Ministry in order to secure information in a thoroughgoing way.

However, a government body under the Kantei's control is now

involved in a scandal. The bureaucracy exposed a laxity of moral

fiber from within the government's center.

CIRO, a government organization under the Kantei, has brought about

such an unheard-of scandal. This event greatly shocked the Kantei,

which is particularly nervous about intelligence.

Prime Minister Yasuo Fukuda was apparently upset on Jan. 16 when the

media reported the alleged leakage of information. "This kind of

problem occurred right under my office," Fukuda said later in the

day. "It's very regrettable-out of the question," Fukuda added.

Machimura, meeting the press yesterday, said in a hard tone of

voice: "There was such an event in a government office that must be

most sensitive to intelligence. I don't know what to say to the

people. It's an unforgivable act."

In the past, a diplomat posted to the Japanese Consulate General in

Shanghai committed suicide. In the wake of that incident, the

government set up a counterintelligence promotion panel under the

then Abe cabinet. In August last year, the counterintelligence panel

worked out a basic course of action to enhance the government's

counterintelligence functions.

In April this year, the government set up a body, called the

Counterintelligence Center, under the CIRO. The Counterintelligence

Center is tasked with collecting and analyzing information about

foreign intelligence agencies and their activities. In April next

year, the center is expected to work out guidelines for all

government personnel in order to prevent classified information

about national security and diplomatic affairs from being leaked.

In December last year, after the Fukuda cabinet's inauguration, the

government set up an advisory panel at the Kantei to discuss an

overhaul of the Defense Ministry due to Maritime Self-Defense Force

personnel's leakage of classified information about an Aegis ship

and other scandals. The government was studying measures to step up

information security.

Above all, Machimura lost face with the CIRO scandal. He presided

over the ruling Liberal Democratic Party's project team to

strengthen Japan's intelligence functions before assuming his

current cabinet post. He has emphasized the importance of

intelligence as chief cabinet secretary.

(Corrected copy): Poll on Fukuda cabinet, political parties, MSDF

refueling mission

SANKEI (Page 5) (Full)

January 16, 2008

Questions & Answers

(Note) Figures in parentheses denote the results of the last survey

conducted Nov. 10-11 last year.

Q: Do you support the Fukuda cabinet?

TOKYO 00000145 018 OF 020

Yes 36.6 (41.1)

No 47.3 (40.3)

Don't know (D/K) + Can't say which (CSW) 16.1 (18.6)

Q: Which political party do you support?

Liberal Democratic Party (LDP) 32.1 (32.2)

Democratic Party of Japan (DPJ or Minshuto) 25.0 (26.5)

New Komeito (NK) 4.0 (3.6)

Japanese Communist Party (JCP) 3.5 (3.1)

Social Democratic Party (SDP or Shaminto) 2.1 (2.6)

People's New Party (PNP or Kokumin Shinto) 0.6 (0.7)

New Party Nippon (NPN or Shinto Nippon) 0.3 (0.1)