Cablegate: Japanese Morning Press Highlights 10/01/08

Published: Wed 1 Oct 2008 01:01 AM
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1) Top headlines
2) Editorials
3) Prime Minister's daily schedule (Nikkei)
Economic policy:
4) U.S. financial crisis placing downward pressure on the Japanese
economy (Nikkei)
5) Nikkei's NEEDS computer forecast for fiscal 2008 see the economy
falling slightly due to low stock prices and yen appreciation
6) Worried ruling camp plans to add 10 trillion yen to the domestic
economic stimulus package due to the international financial crisis
(Tokyo Shimbun)
7) JICA, JBIC to merge yen loans divisions in order to unify ODA
administration (Mainichi)
Budget politics in the Diet:
8) The ruling parties watching financial crisis and opposition camp
moves as they move into deliberations next week on the supplemental
budget bill (Nikkei)
9) Democratic Party of Japan (DPJ) willing to pass the extra budget,
conditioned on Diet dissolution right after (Nikkei)
10) DPJ's Hatoyama to lead interpellations, answering questions
raised about his party by Prime Minister Aso during Diet policy
speech (Asahi)
11) Looking increasingly likely that Diet dissolution will come
after Oct. 3 (Sankei)
12) Prime Minister Aso, hedging his bets, says he will move to the
official residence after the Lower House election (Asahi)
13) LDP Executive Council Chairman Sasagawa slammed for his gaffe by
the opposition (Asahi)
14) Prime Minister Aso used the expression "Greater East Asian War"
to describe WWII in the Pacific, raising questions about his
historical views (Asahi)
Defense and security affairs:
15) Aso wants right of collective self-defense to be discussed in
the Diet (Mainichi)
16) Foreign and defense ministers say official view of collective
self-defense has not changed (Asahi)
17) Three days of drills with the Russian Navy will start on Oct.3
18) LDP approves dispatch of SDF officers to PKO headquarters in the
Sudan (Asahi)
Financial woes originating in U.S. yet to be contained; now crucial
moment to avert depression
Collapse of financial system (Part 1): "Bad dream" with rejection by
U.S. House of bailout bill spreading across world
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Bush calls for early passage of rescue bill for financial system
Financial crises wipes out 2,000 trillion yen in global market
capitalization over past year
Rejection of bailout legislation pushing down global stock prices
Tokyo Shimbun:
TSE loses 100 trillion yen in market capitalization since early this
Dow falls record 777 points, with House rejecting bailout bill
(1) Rejection by House of bailout bill: U.S. must be aware of being
responsible for protecting global economies
(2) Bring city youngsters into agricultural sector
(1) Rejection of rescue bill: U.S. does not understand seriousness
of global financial crisis
(1) U.S. must quickly move to cure global financial woes
(1) U.S. must take responsible action to avert global depression
(1) U.S., as center of financial meltdown, should be responsible for
stabilizing global financial systems
(2) Return of Chinese manned space vehicle to earth: International
cooperation also needed in space
Tokyo Shimbun:
(1) U.S. must realize its responsibility for global economies
(2) Hurriedly ensure safety of workplace, reflecting on increasing
work-related accidents
(1) Abolish fundamentally improper elderly health plan
3) Prime Minister's Official Residence (Kantei)
Prime Minister's schedule, September 30
NIKKEI (Page 2) (Full)
October 1, 2008
Took a walk around his private residence.
Cabinet meeting at the Kantei. METI Minister Nikai remained. The
issues a letter of appointment to Special Advisor to the Prime
Minister Yamaguchi. Chief Cabinet Secretary Kawamura was present. A
photo session followed.
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Entered his name in the register book at the residence of Prince
Katsura at Sanban-cho.
Met with Nippon Keidanren Chairman Mitarai at the Kantei. Then met
with Takada, chief of the secretariat of the Cabinet Office
International Peace Cooperation Headquarters, followed by Deputy
Chief Cabinet Secretary Uruma.
Met with Ambassador to Italy Ando, followed by Party Administrative
Reform Promotion Headquarters chief Chuma.
Met with Chairman Niwa of the Decentralization Reform Promotion
Committee. Then met with Assistant Deputy Chief Cabinet Secretary
Met with Upper House member Otsuji.
Met with Party Constitution Council Chairman Nakayama and Deputy
Chairman Yasuoka and Chief of Secretariat Nakatani.
Dined with Deputy Chief Cabinet Secretaries Matsumoto and Konoike at
Unkai, a Japanese restaurant at ANA Intercontinental Hotel Tokyo.
Then goes to Manhattan Lounge with the two.
Arrived at the private residence.
4) US financial crisis working as downward pressure on Japanese
NIKKEI (Page 5) (Full)
October 1, 2008
The deepening financial crisis that started in the U.S. is
increasingly applying downward pressure on the Japanese economy.
There are no signs of improvement in corporate activities, which
have become stagnant due to a slow down in exports. There is a
strong likelihood that mining and manufacturing production in the
July-September quarter will remain in negative territory for the
third consecutive quarter. The environment for individual
consumption is increasingly becoming harsh due to high prices and
employment instability. There is fear that the sluggish U.S. economy
will aggravate the sense that the global economy is slowing down,
making it difficult to envision a scenario for buoying up the
Stagnant production, shrinking consumption
The mining and manufacturing production index (preliminary figure;
100 in 2005) for August, released by the Ministry of Economy, Trade
and Industry (METI), stood at 104.5, down 3.5 PERCENT from the
previous month. In the manufacturing industry production projection
survey, which shows an outlook for production by leading
manufacturers, such an index for September is expected to rise 1.6
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PERCENT and drop in October by 0.1 PERCENT . Given these
projections, such an index for the July-September quarter will
likely drop 1.1 PERCENT , indicating a strong possibility of the
index marking negative growth for three quarters in a row.
The major cause of the slow down in production is a slump in
exports. In particular, drops in U.S.- and Europe-bound exports of
automobiles and Asia-bound electronic parts exports are noticeable.
If exports show negative growth for four consecutive quarters, it
would be the first since 2001, when the IT bubble collapsed in the
U.S. If the U.S. economic slump becomes drawn out due to the
financial crisis, the economies of emerging countries, such as
China, are bound to suffer a blow. A growing view is that the
production environment would remain bad for the next six months or
so, as Daiwa Research Institute projected.
Now that corporate activities are bound to become stagnant, the
consequent constraining of employment and wages will likely affect
personal consumption. The total unemployment rate for August stood
at 4.2 PERCENT , up 0.2 points from the preceding month. The
job-offers-to-seekers rate fell below 1.00 for nine consecutive
months. A rise in the prices of daily necessities and employment
instability are beginning to apply pressure on household budgets.
A loss of consumer confidence is also visible. According to a survey
released on the 30th by the Nippon Research Institute (NRI), an
external body of the Cabinet Office, a livelihood anxiety index
showing projection for circumstances for the next one year logged
163 in August, topping 159 marked in April 2004. This is the worst
level since the survey started in April 1977. The NRI has analyzed
the outcome of the survey that concern about a rise in prices and a
decline in business confidence is mounting.
Falling stock prices as a result of the financial crisis is also
working as a negative factor for consumption. An increasing number
of medium- and small-businesses are collapsing. Kyohei Morita at
Barclays Capital Securities said, "Since it is difficult for medium-
and small businesses to offer jobs, chances are high that
consumption will become sluggish."
5) Real growth rate for fiscal 2008 down by 0.1-0.2 points due to
plunging stock prices, strong yen trend, according to NEEDS
NIKKEI (Page 5) (Full)
October 1, 2008
According to a forecast by Nihon Keizai Shimbun Digital Media, based
on NEEDS, a comprehensive economic data bank, real growth in the
economy in fiscal 2008 will fall 0.1-0.2 points, if stock prices
continue to fall and the trend of yen appreciation continues into
the second half of fiscal 2008 (October-March, 2009). The strong yen
will put a dent in exports and corporate earnings, stagnating
economic activities.
The estimate was made, based on the comparison with a case of the
Nikkei Stock Average (approximately 12,800yen) and the yen exchange
rate (about 107.6 yen against the dollar) hovering on the level
marked in the July-September quarter in 2008.
Provided that stock prices hover at around 11,000 yen and yen
quotation at 100 against the dollar, the growth rate would drop 0.1
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point. As a result, a decline in exports will apply downward
pressure on corporate earnings, holding down capital investment,
albeit slightly.
If stock prices go down to 10,000 yen and the yen exchange rate to
95 against the dollar, the economic growth rate would fall 0.2
point. The main reasons for this would be a slow down in exports
and stagnant capital investment. According to the estimate, however,
those factors would not have a major impact on personal consumption,
which commands more than 50 PERCENT of GDP.
6) Ruling coalition eyes additional economic measures worth 10
trillion yen, focusing on tax incentives
TOKYO SHIMBUN (Page 1) (Full)
October 1, 2008
The Liberal Democratic Party (LDP) and the New Komeito started
yesterday mapping out additional economic measures to ease growing
concerns about a recession in Japan due to the global financial
crisis triggered by the U.S. Some members are calling for a package
worth 10 trillion yen, focusing on tax incentives. The coalition
hopes to present such extra measures after the fiscal 2008
supplementary budget bill clears the Diet and before the next House
of Representatives election.
The ruling coalition agreed in a meeting of their secretaries
general and Diet Affairs Committee chairmen yesterday to set up a
project team tasked with hammering out measures to counteract global
stock plunges following the rejection by the U.S. House of
Representatives of a rescue bill for the U.S. financial system. A
decision was also made to swiftly map out additional economic
measures and propose them to the government.
In addition to tax incentives, the package is expected to include
measures to reduce corporate tax rates and to expand the coverage of
credit guarantees for small businesses.
The coalition intends to incorporate these extra measures, together
with the income tax reduction scheme to be implemented in fiscal
2008, in a second supplementary budget bill that the ruling parties
intend to submit to the ordinary Diet session early next year.
But the ruling parties have yet to determine where the fiscal
resources for extra economic measures should come from, so
coordination may not go smoothly in the government and the ruling
7) Yen-loan sections of JICA, JBIC to be integrated
MAINICHI (Page 5) (Full)
October 1, 2008
The Japan International Cooperation Agency (JICA) and the Japan Bank
for International Cooperation (JBIC) have decided to integrate their
yen-loan sections engaged in aid to developing countries today. When
official development assistance (ODA) disbursements have been
reduced every year, they aim to strengthen collaboration with the
private-sector and nongovernmental organizations (NGO).
Through the integration, JICA will be tasked with such new services
as yen loans and part of grant aid of which the Foreign Ministry is
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now in charge, in addition to its current duty of technological
cooperation (personnel dispatch). JICA and JBIC are willing to
integrate aid administrative functions now split among various
organizations. They have also decided to set up a liaison center
with the private sector to learn know-how from NGOs on aid
activities with meager funds, aiming to offer aid that combines
personnel contributions with financial aid.
8) Ruling bloc leaning toward enacting supplementary budget
NIKKEI (Page 2) (Abridged slightly)
October 1, 2008
In the wake of the U.S.-originated global stock plunge, the ruling
camp will make utmost efforts for the enactment next week of a
fiscal 2008 supplementary budget bill, including a comprehensive
economic stimulus package. The ruling bloc still clings to its basic
plan to dissolve the Lower House in October for a snap general
election in early November, but cautious views about an early
dissolution have emerged in the Liberal Democratic Party. Prime
Minister Taro Aso plans to make a final decision after closely
monitoring the economic situation and the opposition bloc's moves.
Speaking to a group of reporters last evening, the prime minister
played up his eagerness for an early enactment of the supplementary
budget, saying: "We must get the extra budget approved by the Diet
as an emergency means to prop up the economy at all costs. I think
the New Komeito understands that, as well."
Chief Cabinet Secretary Takeo Kawamura, too, called for the
cooperation of the opposition bloc in a press conference, saying:
"It is Japan's responsibility to the world to act properly. It is
important to build a consensus from such a viewpoint."
In a meeting yesterday of the secretaries general and others of the
LDP and New Komeito, the two parties confirmed they would aim at the
swift enactment of the extra budget in line with the prime
minister's wishes. They are planning for the budget's enactment on
Oct. 9 after two days of budget deliberations in each chamber
starting on Oct. 6 following the Oct. 1-3 representative
interpellations in the two houses.
Many in the leaderships of the two chambers who have been calling
for Lower House dissolution ahead of budget deliberations also
voiced in their meeting the need to speedily pass the extra budget.
A prime ministerial aide noted: "The prime minister is firmly
determined to get the budget approved by the Diet. Still, the
timetable for Lower House dissolution and a general election would
not be delayed significantly. There is no doubt that the election
will take place. The day to dissolve the lower chamber is near at
hand." Deputy Chief Cabinet Secretary Yoshitada Konoike, who is
close to the prime minister, indicated at a fund-raising party held
by an LDP lawmaker in Tokyo last night that the prime minister would
dissolve the Lower House before long.
If the chamber is dissolved immediately after the extra budget
clears the Diet on Oct. 9, chances are that the official campaign
will kick off on Oct. 21 and the voting will take place on Nov. 2.
If budget deliberations continue until mid-October, the option of
going to the polls on Nov. 9 would emerge. In the event the
opposition bloc tries to protract the deliberations further, the
ruling camp's strategy is to dissolve the chamber at that point.
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Prospective candidates across Japan are also in favor of an early
dissolution for financial reasons. A New Komeito executive
commented: "We want to enact the supplementary budget, but at the
same time, we must run the Diet so as not to destroy the scenario up
to the election on Nov. 9."
Meanwhile, in an LDP General Council meeting yesterday, one said:
"The country needs to cooperate with U.S. measures; this is no time
to discuss dissolving the Diet."
The prime minister told LDP Upper House Caucus Chairman Hidehisa
Otsuji at the Prime Minister's Office last night that giving up an
early dissolution is one option depending on how the economy turns
out. Given the murky economic and financial situations, there is a
view that the timing for dissolving the Diet is becoming fluid.
9) DPJ willing to endorse supplementary budget based on Lower House
dissolution; Related bills to move into focus
NIKKEI (Page 2) (Abridged slightly)
October 1, 2008
If the ruling bloc promises an early Lower House dissolution, the
main opposition Democratic Party of Japan intends to agree to adopt
a supplementary budget bill after two days of deliberations in each
chamber. Even if the Upper House rejects the budget bill, it will
clear the Diet, given the Lower House's ascendancy over the upper
chamber under the Constitution. In future negotiations between the
ruling and opposition blocs, a bill to make up for regional revenue
shortfalls resulting from the loss in April of the provisional tax
rates on road-related revenues is expected to become a bone of
The DPJ is scheduled to discuss the handling of the supplementary
budget and related bills at its budget research committee meeting
and its shadow cabinet meeting today. Objections are deeply rooted
in the party leadership, with one saying: "It is not effective to
take half-baked economic countermeasures." Some are in favor of
approving the bills, reasoning that it is not good to generate an
impression before the next Lower House election that the party is
trying to block the government's effort to invigorate the economy.
The DPJ, joined by the Social Democratic Party and the People's New
Party, has called on the ruling camp to dissolve the Lower House
through talks. The main opposition party plans to continue pressing
the ruling coalition for assurance for an early dissolution with an
eye on holding the election by Nov. 9.
At the same time, some DPJ members are highly alarmed at pushing
ahead with deliberations alone, while leaving the dissolution
timetable ambiguous. Upper House DPJ Caucus Chairman Kenji Hirata
warned: "Nobody knows how may days the deliberations will take
before the bill is adopted."
The Upper House might shelve discussions on the regional
compensatory bill that came from the Lower House. In such a case, it
takes 60 days for the legislation to clear the Diet with the ruling
bloc's overriding vote in the Lower House. Many DPJ lawmakers are
supportive of the bill so as not cause a hole in local fiscal
resources. Some think a decision must be made by linking the matter
to the party's dissolution strategy.
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10) DPJ's Hatoyama eager to clash in Diet with Prime Minister Aso
ASAHI (Page 4) (Full)
October 1, 2008
Yukio Hatoyama, secretary general of the main opposition Democratic
Party of Japan (DPJ), is enthusiastic about locking horns with Prime
Minister Taro Aso in representative interpellations today in the
plenary session of the House of Representatives. It is because their
grandfathers were prime ministers who were rivals also engaged a
power struggle. Hatoyama intends to argue against Aso's unusual
"questions" posed to the DPJ in his policy speech delivered on Sept.
In 1946, Hatoyama's grandfather Ichiro Hatoyama was banned from
holding public office immediately before assuming the prime
minister's post, leaving the reins of government with Shigeru
Yoshida, Aso's grandfather. Ichiro Hatoyama, however, became prime
minister in 1954, after devoting himself intensely to toppling the
"one-man" force, Prime Minister Yoshida, from power. Ichiro made
efforts to normalize diplomatic ties with the Soviet Union.
Yukio Hatoyama stressed that Shigeru Yoshida was a bureaucrat-turned
politician but Ichiro Hatoyama was a party politician. He has always
superimposed his political stance of toppling bureaucracy-led
politics on his grandfather. He expressed his rivalry against Aso in
August when Aso became secretary general of the ruling Liberal
Democratic Party (LDP), but his desire ended in failure because
Prime Minister Yasuo Fukuda suddenly abandoned his administration.
Hatoyama has now finally got a chance to lock horns with Aso. He is
bent on clashing with Aso, saying: "I can't put up with such rude
11) Diet dissolution to be put off until after Oct. 3 as
deliberations begin tomorrow on supplementary budget bill
SANKEI (Page 1) (Excerpts)
October 1, 2008
The government and ruling parties yesterday decided to start
deliberations Oct. 2 on the supplementary budget bill for fiscal
2008 that includes an emergency economic stimulus package. There are
many voices in the Liberal Democratic Party (LDP) and New Komeito
calling for Diet dissolution on Oct. 3, but Prime Minister Taro, who
is giving priority to the economic package in the face of the
financial crisis started in the U.S., made his own decision. With
that, it is certain now that dissolution will be put off until after
Oct. 6 next week.
On the other hand, the Prime Minister also has shown a strong
intention to pass the anti-terrorist special measures bill that
would extend by a year the Maritime Self-Defense Force's refueling
mission in the Indian Ocean. There is thus a possibility of Lower
House deliberating that bill as well as the supplementary budget at
the same time. The Prime Minister also has shown interest in having
the three bills establishing a consumer affairs agency passed. The
outlook after next week is for fierce horse trading to occur between
the ruling and opposition camps over the schedule of deliberations
on these pieces of legislation and the timing of the dissolution.
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12) Prime Minister Aso plans to move into official residence after
Lower House election
ASAHI (Page 4) (Full)
October 1, 2008
Asked by reporters when he would move into his official residence
adjacent to the Prime Minister's Official Residence (Kantei), Prime
Minister Taro Aso said yesterday: "After the election." He indicated
that he would come to the Kantei from his private residence in
Shibuya Ward. He appears to be thinking that he will move into his
official residence after his party wins the House of Representatives
Nine prime ministers -- from Kiichi Miyazawa to Yasuo Fukuda --
lived in the prime minister's official residence. Of the nine, six
prime ministers moved into there within two weeks after taking
Aso's residence is a magnificent Western-style house in which former
Prime Minister Shigeru Yoshida once lived. A source familiar with
Aso said: "It would be uncomfortable for him to live in the official
residence. He can get rid of his boredom by living in his private
residence." Shinzo Abe and Fukuda, who inherited their fathers'
private residences, moved in the official residence 62nd day and
111th day respectively from the day they assumed office.
13) SDP protests Sasagawa's remark
ASAHI (Page 4) (Full)
October 1, 2008
Following the rejection of a financial industry bailout by the U.S.
House, Liberal Democratic Party (LDP) General Council Chairman
Takashi Sasagawa said: "The speaker of the House is a woman. That's
why (the bailout plan) burst." In regard to Sasagawa's remark,
Social Democratic Party Chairperson Mizuho Fukushima yesterday
released a statement calling on Sasagawa to withdraw his remark. The
statement went: "It had nothing to do with the fact that the House
speaker is a woman. He discriminates against women and his remark is
Sasagawa, meanwhile, told reporters in Maebashi City: "I didn't say
that the bailout was rejected because the House speaker is a
14) Aso uses expression "Greater East Asia War," raising questions
about his historical view
ASAHI (Page 4) (Full)
October 1, 2008
Prime Minister Aso told reporters yesterday at his office when asked
for his view of wars in the past, "I think the Sino-Japanese War (of
1894-95) and the Russo-Japanese War (of 1904-05) were a little bit
different from the so-called Greater East Asia War or the Second
World War." He added: "It's been about 120 years since the Meiji
Constitution was promulgated. Regarding Japan's history, there is
history that Japan can boast of, and there is also history Japan
cannot boast of."
The "Greater East Asia War" (Daitoa Senso) is the official name
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adopted by the government in wartime. After the war, however, GHQ,
or the General Headquarters of the Allied Powers, prohibited the
government from using it in its official documents. School textbooks
generally refer to it as the "Pacific War" (Taiheiyo Senso) or the
"2nd World War" (Dainiji Sekaitaisen).
Chief Cabinet Secretary Kawamura, meeting the press yesterday,
stated: "The prime minister was under former Prime Minister Shigeru
Yoshida's tutelage from his childhood, and the prime minister, among
our generation, is the only lawmaker who can recite the Imperial
rescript on education. People in those days didn't say the 'Second
World War' but said the 'Greater East Asia War.' I thought this
might be what he meant."
15) Aso urges Diet to debate collective self-defense
MAINICHI (Page 5) (Full)
October 1, 2008
Prime Minister Taro Aso yesterday met at his office with three
leaders from the ruling Liberal Democratic Party, including LDP
Constitution Council Chairman Taro Nakayama. Aso has recently
alluded to the necessity of changing the government's conventional
way of reading and interpreting the Constitution over the right to
collective self-defense. In this connection, Nakayama said the Diet
should reinterpret the right to collective self-defense. According
to Nakayama, Aso said he wanted the Diet to discuss the matter. The
government, based on its constitutional interpretation, has taken
the position that Japan is not allowed to participate in collective
self-defense. Nakayama reported on the past circumstances of this
government interpretation. Meanwhile, the Diet has set up a panel on
the Constitution in both houses. However, the panels have yet to
meet so far. Touching on this fact, Aso told Nakayama that the
panels should start discussions early.
16) Foreign, defense chiefs say gov't view on collective
self-defense remains same as ever
ASAHI (Page 4) Full)
October 1, 2008
Foreign Minister Nakasone and Defense Minister Hamada, respectively
meeting the press yesterday, indicated that they would take over the
government's conventional view that Japan is constitutionally not
allowed to use the right to collective self-defense. Meanwhile,
Nakasone and Hamada, given changes in the security environment of
Japan, pointed to the necessity of discussions for Japan's possible
participation in collective self-defense.
Concerning the right to collective self-defense, Prime Minister Aso
stated right after coming into office that the government's
constitutional interpretation should be changed and Japan should be
allowed to exercise the right to collective self-defense.
Nakasone said the government's view remains the same as ever. Based
on this standpoint, he remarked: "The security environment has been
changing. We should discuss well about whether the current
interpretation is all right." Hamada indicated that he would have to
follow the government's current policy. He added: "When thinking as
a politician, "I wish we could do so. However, I think it's
extremely delicate as to whether it will become an issue (in
campaigning for a general election)."
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17) Joint drill with Russian navy set for Oct. 3
ASAHI (Page 4) (Full)
October 1, 2008
The Maritime Self-Defense Force will conduct an annual bilateral
joint search and rescue drill with the Russian navy on Oct. 3, MADF
Chief of Staff Keiji Akahoshi said in a press conference yesterday.
Russia has been at odds with the United States and Europe over the
Georgia issue, so there were cautious arguments from within the
government. "Since this summer, we've coordinated with our Russian
counterpart while in consideration of the international situation,
and we decided to carry it out at this time," Akahoshi explained.
18) LDP OKs SDF dispatch
ASAHI (Page 4) (Full)
October 1, 2008
The Liberal Democratic Party's General Council met yesterday and
approved a government plan to send officers from the Self-Defense
Forces for United Nations peacekeeping operations in the southern
part of Sudan. The government will make a cabinet decision on Oct. 3
to adopt the plan and will send two SDF officers to the headquarters
there in mid-October and late that month. They will be posted there
until the end of June next year.
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