Cablegate: Daily Summary of Japanese Press 06/19/08

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WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST DIVISION;

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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 06/19/08

INDEX:

(1) Japan, China reach ambiguous agreement on gas field development,

shelving border issue (Nikkei)

(2) Arguments on whether to hike sales tax or not will likely

accelerate (Asahi)

(3) U.S. courts-martial opened to Japanese press (Asahi)

(4) Former Marine Commander defines Guam relocation plan as failure

(Okinawa Times)

(5) Poll on Fukuda cabinet, political parties, new healthcare system

for elderly, civil service reform, censure motion against premier

(Yomiuri)

(6) Prime Minister's schedule, June 18 (Nikkei)

ARTICLES:

(1) Japan, China reach ambiguous agreement on gas field development,

shelving border issue

NIKKEI (Page 3) (Full)

June 19, 2008

Japan and China have reached an agreement to jointly develop gas

fields in the East China Sea while pushing the thorny issue of

setting a border between their respective exclusive economic zones

(EEZ) backstage. But the agreement contains many ambiguous parts,

and details will be worked out in future negotiations. It is

uncertain whether the joint development will be a model case for

Japan and China to jointly exploit natural resources as expected by

Japan.

Shirakaba: Degree of involvement not be determined yet

Japan was particularly eager for an agreement on the joint

development of the Shirakaba (Chunxiao in Chinese) gas field.

Although the Shirakaba field is located on the Chinese side of the

median line between Japan and China, Japan was concerned that China

might pump up natural gas in waters on the Japanese side.

Ignoring Japan's request, China began to independently develop the

Shirakaba field. A government source called the field "the very

symbol in the gas field dispute between Japan and China." Given

this, China was taking a tough stance about the joint development of

the Shirakaba field, as a Chinese Foreign Ministry official said:

"It should be separated from joint development." In the end, China

agreed on Japan's investment in the project.

Some have highly evaluated the specification of how the Shirakaba

field should be handled in the agreement itself." But it is still

unknown to what extent Japan's involvement will be admitted.

According to a news statement, the agreement specifies that

investment by Japanese companies in the Shirakaba-development

project should be in accordance with Chinese laws, demonstrating

China's leadership. On the ratio of investment to be discussed in

future negotiations, as well, it is unlikely that Japan's ratio will

be larger than China's.

TOKYO 00001694 002 OF 010

Foreign Minister Masahiko Koumura said in a press briefing last

evening: "We were able to solicit an agreement on Japan's capital

participation in the Chinese development of a gas field." Whether it

is called joint development or not is a matter of no importance.

Gas fields near Asunaro for joint development yet to be picked

In the agreement on the joint development in the northern part of

the East China Sea, specifics on many items have yet to be

determined. Japan and China will pick exact sites for joint

development within the area after conducting a joint investigation

of resources. The two countries will distribute profits earned from

the project to them in a ratio reflecting their respective

investment. Japan and China expect to split the joint development

costs on a 50-50 basis in principle, but specifics will be discussed

from now.

Japan was calling for the two countries to jointly develop an area

that straddles the median line. This call was reflected in the

agreement. According to a source related to Japan-China relations,

however, the site agreed on for joint development covers a wider

area on the Japanese side from the median line than that on the

Chinese side, placing China at an advantage.

The Asunaro (Longjing in Chinese) gas field, which is viewed as a

promising field, is not covered by the joint-development agreement.

Japan has been calling for joint development of four gas fields,

including the Shirakaba and Asunaro fields, near the median line,

but the remaining two - the Kashi (Tianwaitian) and Kusunoki

(Duanqiao) fields - are outside the agreement. The two countries

have decided to continue negotiations on the three gas fields. But

China may insist on its independent development of the fields.

Some government officials voice apprehension that while Japan is

engaged in investigation related to joint development and in

negotiations, China could promote the development of other gas

fields in earnest.

Uncertain profitability

The joint development of gas fields is in accordance with Japan's

policy of diversifying its source of energy supply. In order to

transport the produced gas to Japan, though, Japan will have to

build a pipeline by a huge investment. It remains to be seen whether

the project will pay or not.

According to China, it confirmed through test drilling that the gas

fields in the East China Sea have 18 billion barrels of gas reserves

in total. This figure is about 5 PERCENT of the production in the

Sakhalin-2 project in Russia, in which Japanese companies have

invested. It also accounts for less than 10 PERCENT of the annual

demand of oil and natural gas in Japan. Of the 18 billion barrels,

64 million barrels of gas lies in the Shirakaba field. As Economy,

Trade and Industry Minister Akira Amari said: "We have not expected

too much of the amount of gas reserves there," Japan sees that its

contribution to Japan stable energy supply will be limited.

In the case of maritime gas fields, production costs are higher than

those in ground gas fields. To transport the produced gas to Japan,

it will cost several hundreds billion yen to construct a pipeline

and a platform to liquefy gas. Japanese petroleum companies and

trading houses are expected to invest in the project in the future,

TOKYO 00001694 003 OF 010

but the project is likely to be unprofitable. Many therefore view it

practical to send the product to China through the pipeline China is

now constructing. In such a case, Japan will receive profits in

accordance with the ratio of its investment.

Teikoku Oil Co., under the wings of Inpex Holdings, holds concession

rights for gas fields in the areas on the Japanese side from the

median line between Japan and China. The company is interested in

the project, as President Masatoshi Sugioka saying: "We want to

deepen cooperative relations with China." The company intends to

decide on whether to invest in the project while analyzing its

profitability.

(2) Arguments on whether to hike sales tax or not will likely

accelerate

ASAHI (Page 4) (Full)

June 19, 2008

Prime Minister Fukuda's remark referring to a consumption tax hike

will likely accelerate discussions on the issue in the Liberal

Democratic Party (LDP). Aware of an anticipated next Lower House

election, a cautious view toward such a hike is deep-rooted in the

party. Voices calling for using revenues from an increased tax rate

to cover ballooning social security expenses are growing. It is now

clear that the consumption tax issue will become the central issue

in the year-end tax code revision.

Those positive about raising consumption tax: Some motivated by

desire to keep road budget intact

Former Chief Cabinet Secretary Kaoru Yosano, who places a priority

on fiscal reconstruction, welcomed the prime minister's statement,

noting, "The prime minister's statement is very reasonable." The LDP

Fiscal Reform Study Group, chaired by Yosano, on June 11 compiled a

set of proposals for the management of fiscal policy for the

immediate future, based on the premise that the consumption tax rate

should be raised to at least 10 PERCENT by the middle of the

2010's. The panel is also looking into measures to reduce wasteful

spending. The panel thus can be characterized as a fiscal

reconstruction force.

In the meantime, there is a possibility of pressure for boosting

spending gaining ground, backed by the prime minister's statement.

Secretary General Bunmei Ibuki in a speech made last month said,

"The prime minister will do what should be done without hesitating.

In return for that, he would openly ask the people to consider a

possible consumption tax. His stance is that it would be unavoidable

for the prime minister to raise the consumption tax in order to

place his policy imprint. In other words, he is an advocate of a

balanced expansion.

The road policy clique is also in favor of hiking the consumption

tax. Election Committee Chairman Makoto Koga in a speech on the

reallocation of special-purpose road construction revenues given in

May said, "I cannot possibly tolerate a road funds grab-bag game

among welfare, education and environment lobby members. Serious

discussion, including discussion on the reallocation of road funds,

is necessary." Koga aims at boosting revenues for road construction

so that the reallocation of road funds will not squeeze the road

construction budget.

TOKYO 00001694 004 OF 010

The LDP Tax System Research Commission, chaired by Yuji Tsushima,

will start considering a consumption tax hike starting in July with

eye on the drastic reform of the tax code at year's end. Chief

Cabinet Secretary Machimura at a press conference on June 18 pointed

out, "It is necessary to pursue discussion on the consumption tax

hike issue by the end of the year." Some members have already made a

bullish remark with a senior Policy Research Council member saying,

"We want the panel to come up with a policy direction, such as that

at least an increase of such and such percentage would be

necessary."

Those cautious about tax hike alert to possible setback stemming

from such a hike in run-up to general election

Regarding the prime minister's remark, an aide to him said, "The

prime minister always says what he thinks." However, no prospects

have been obtained for the government to increase the consumption

tax under a circumstance where the next general election could be

held by the next fall at the latest.

Former Secretary General Tsutomu Takebe at a meeting on the 18th

said, "It is impossible to pursue a tax hike discussion under a

circumstance where scandals involving public servants are

continuing." He made this remark out of consideration to the

first-term lawmakers elected riding on the strength of the

popularity of then Prime Minister Koizumi, because they are

vulnerable to the impact of setbacks.

Furthermore, the so-called rising-tide force that attaches

importance to economic growth, including former Secretary General

Hidenao Nakagawa, is continuing to criticize moves of those who are

in favor of a consumption tax hike. Nakagawa said, "The prevailing

view among the public is that there should not be a tax increase

without a substantive personnel cuts at Kasumigaseki (bureaucratic

center) and Nagatacho (political center).

Former Prime Minister Abe in a speech given on the 18th underscored,

"It is not possible to gain understanding of a consumption tax hike

from the people unless wasteful spending is abolished. Further

efforts are needed."

The prime minister wants to determine how the public will respond,

as he said during a press conference on the 17th: "I am now thinking

hard about what response the public will make." He was quick to

check the argument calling for a consumption tax hike from leading

the way, telling reporters on the 18th: "I will do away with

administrative waste. I must also determine the outcome of social

security discussion. There is also the road funds reallocation

issue. Since the tax issue comes after those issues, it will take

still more time to discuss what to do about the consumption tax."

(3) U.S. courts-martial opened to Japanese press

ASAHI (Page 37) (Abridged slightly)

June 19, 2008

Two recent U.S. military courts-martial, one held recently in

Yamaguchi and the other in Okinawa, that tried U.S. servicemen for

sexual violence against Japanese women were both opened to the

press. What is a court-martial, a military court, like? Why did the

U.S. military in Japan open the courts-martial to the press, a rare

TOKYO 00001694 005 OF 010

move?

On June 10, a court-martial was held at the U.S. Marine Corps'

Iwakuni Air Station in Yamaguchi Prefecture for Gunnery Sgt. Carl M.

Anderson, 40, who had been indicted on 19 charges, including rape

and conspiracy to kidnap. On each charge, the judge carefully asked

Anderson, "You were not forced by anyone to admit to the charge,

were you?" and, "Do you understand the meaning of the provision?"

The sergeant admitted to seven charges, including illicit sexual

intercourse with a woman other than his wife and indecent acts in

front of other service members. In fact, nine charges, including

rape, had been dropped as a result of plea-bargaining ahead of the

court-martial.

In October 2007, a 19-year-old woman was raped in the city of

Hiroshima. The Hiroshima prefectural police sent to prosecutors

papers on four U.S. Marines on suspicion of gang-raping the woman.

The Hiroshima District Public Prosecutors Office decided not to

prosecute the four, citing insufficient evidence. Anderson is one of

them.

Under the Japan-U.S. Status of Forces Agreement specifying criminal

procedures stipulates that in the event Japan does not indict a U.S.

service member suspected to have committed a crime in Japan,

jurisdiction over the case shifts to the U.S. military. The

Yamaguchi case falls in this category.

The U.S. military independently conducted an investigation into the

case and indicted the four members in violation of the U.S. Uniform

Code of Military Justice (UCMJ), which corresponds to the criminal

code. The U.S. military has court-martialed the four one by one

since May.

Courts-martial held earlier for two others and for a Marine

allegedly sexually assaulted a middle school girl in Okinawa ended

between one and four days as they also entered into plea-bargains.

According to Surugadai Law School Professor Shinichi Shima, entering

plea-bargain is more common in courts-martial than in regular

criminal courts. Shima explained the reason this way: "A

court-martial is held even at the battlefield. In order to return

soldiers to their original duties, the military needs to finish up

courts-martial speedily."

According to the Justice Ministry, there were four cases in 2007 --

one injury and three theft cases -- in which U.S. service members

were court-martialed because Japanese investigative organs did not

press charges against the suspects. The courts-martial found the

person involved in the injury case not guilty and the ones involved

in thefts guilty.

Courts-martial are convened to try members of the U.S. military or

civilian employees of the U.S. military who are suspected to have

violated the UCMJ. There are three types of courts-martial --

general, special and summary. Opened to the press in Iwakuni and

Okinawa were general courts-martial that try rape, murder, and other

cases.

A court-martial consists of a military judge, trial counsel, and

defense counsel who have passed the bar examination and have

undergone a military education. A suspect has the right to hire a

TOKYO 00001694 006 OF 010

private defense counsel.

As is the case with a trial in Japan, a U.S. court-martial is opened

to the public in principle. In reality, Japanese people cannot sit

in courts-martial because U.S. bases in Japan are off-limits to the

Japanese public.

So why did the U.S. military open the two courts-martial to the

Japanese press?

An officer of the US Forces Japan Command explained: "We opened the

courts-martial in order to demonstrate that the United States never

overlooks any crime." The officer also indicated that the United

States would open future courts-martial on a "case-by-case basis" --

an ambiguous explanation.

Surugadai University Professor Emeritus Hiroshi Honma, who is an

expert on the SOFA, said: "Behind the opening of the courts-martial

lies the issue of realigning US forces in Japan. The step reflects

the U.S. military's desire that Iwakuni residents accept the

transfer of a carrier-based air wing. Distrust (in the U.S.

military) is also mounting in Okinawa due to a growing number of

crimes committed by U.S. military personnel. The U.S. military is

trying to seek Japanese understanding by showcasing its stance of

trying crimes strictly."

Over the last several years, the U.S. military has severely dealt

with crimes committed by its members in the wake of global criticism

of torture at Abu Ghraib in Iraq that came to light in 2004.

The UCMJ was amended in October 2007, and the types of sexual crimes

have now increased from two -- rape and other sexual misconduct --

to 14. The Iwakuni court-martial also handed down a sentence for a

newly established crime.

(4) Former Marine Commander defines Guam relocation plan as failure

OKINAWA TIMES (Page 1) (Full)

June 18, 2008

(Honolulu)

Former Commander of Marine Forces Pacific retired Lt. Gen. Henry

Stackpole said: "I think that the agreement reached between the U.S.

and Japan to transfer Marines from Okinawa to Guam was a failure."

As main reasons for this view, he cited the limited space available

for training, and the difficulty in financing the procurement of

high-speed transport vessels that can travel between Guam and

Okinawa. He also disclosed that in 1993, the U.S. Pacific Command

had studied plans to halve the number of U.S. Marines in Okinawa.

In an interview with the Okinawa Times at the University of Hawaii,

Stackpole stated this about the Guam relocation plan: "There is the

problem of Marines being unable to travel freely. There is no

problem in the case of the Air Force or the Navy establishing bases

there, given their flexibility. But the Marine Corps has not

deployed its own transport vessels in Guam. Relocating Marines to

Guam is an unsatisfactory plan."

When negotiations on the realignment of U.S. forces in Japan were

underway, Stackpole was chief of the Research Institute for

Asia-Pacific Regional Strategy, a think-tank affiliated to the

TOKYO 00001694 007 OF 010

Defense Department in Honolulu. In this position, he was giving

advice to the Pacific Command on the Okinawa issue and was attending

meetings of officers responsible for negotiations with Japan. He

also served as Okinawa Area Coordinator, so he is well versed in

issues related to Okinawa bases.

Observers think that the retired officer's severe view represents

the dissatisfaction smoldering among Marines.

According to Stackpole, the Pacific Command had produced in 1993 a

report specifying that it was possible to reduce the number of

Marines in Okinawa from the 21,000 at that time to 10,000 - the size

of a brigade - as a result of studying the experience of dispatching

troops to participate in the Gulf war. At that time, he was looking

into how appropriately troops should be deployed.

Stackpole reportedly said in recent realignment talks: "If the

number of troops in Okinawa is reduced to the size of a brigade, it

will become possible for them to respond to various situations

promptly, with no obstacles to their operations." In the plan to

transfer Marines to Guam, he has also the size of a brigade in

mind.

(5) Poll on Fukuda cabinet, political parties, new healthcare system

for elderly, civil service reform, censure motion against premier

YOMIURI (Page 11) (Full)

June 17, 2008

Questions & Answers

(Figures shown in percentage. Parentheses denote the results of a

survey taken in May.)

Q: Do you support the Fukuda cabinet?

Yes 25.1 (26.1)

No 63.4 (64.7)