Cablegate: Daily Summary of Japanese Press 08/20/09

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DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA;
WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST DIVISION;
TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS OFFICE;
SECDEF FOR JCS-J-5/JAPAN,
DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA
FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR;
CINCPAC FLT/PA/ COMNAVFORJAPAN/PA.

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TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA

SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 08/20/09

INDEX:

(1) Interview with Daniel Okimoto, adviser on Japan policy to new
U.S. Ambassador John Roos [Asahi]
(2) Torn between "hatred" and "instability" [Sankei]
(3) "Ozawa children" to multiply in DPJ after general election
[Asahi]
(4) 2009 Lower House election: Target for seats and simulation of
three political situations [Nikkei]
(5) Political parties vying for 10 million unaffiliated votes
[Nikkei]
(6) Pre-election poll on public trends [Tokyo Shimbun]
(7) Yellow light for Japan's fighter production [Nikkei]
(8) Escalating nuclear power generation business: Japan, U.S., and
Europe battling for [nuclear reactor] orders (Part 1) [Yomiuri]
(9) TOP HEADLINES
(10) EDITORIALS
(11) Prime Minister's schedule, August 19 [Nikkei]
(Corrected copy) North Korea was prepared to reinvestigate
abductions, but aborted due to PM Fukuda's resignation [Asahi]

ARTICLES:

(1) Interview with Daniel Okimoto, adviser on Japan policy to new
U.S. Ambassador John Roos

ASAHI (Page 11) (Full)
August 20, 2009

(Interviewer: Yoichi Kato, editorial staff)

Following is the gist of the interview with Professor Emeritus
Daniel Okimoto of Stanford University, adviser on Japan policy to
U.S. Ambassador to Japan John Roos:

Q: How has the economic crisis impacted U.S. defense policy?

Okimoto: The worldwide recession has probably hit bottom. However,
the U.S. economy will not see a V-shaped recovery; recovery will
probably be "jagged."

Defense spending will be cut. The Obama administration has already
discontinued the production of F-22 stealth fighters and made other
achievements, but more will be needed. The defense budget, which was
about 7 percent of GDP in fiscal 2008, including allocations in the
supplementary budget, will have to be reduced to around 5 percent.

If the extra revenue from the cutbacks is channeled into building
high-speed railways and other constructive infrastructure
improvement or the development of clean technology, America will be
able to return to a path of growth that will not only contribute to
its own prosperity, but also to the stability of the world as a
whole.

Q: What are the threats that need to be dealt with?

Okimoto: If the world economy does not grow while the gap between
rich and poor keeps widening, the world will become unstable.
Somalia is a typical example of a "failed state." The anarchy there
has become a hotbed of terrorism. Africa and the Eurasian continent
should not sink into hopeless poverty. This will be a recipe for
dreadful instability.

TOKYO 00001926 002 OF 015

Environmental destruction is a new security issue. Global warming
will give rise to serious global security issues, such as flooding,
famine, and epidemics.

Q: What do you think about the Obama administration right now?

Okimoto: It is working on major pending issues like medical
insurance reform. Serious political conflict has emerged with the
opposition Republican Party. The reason why the Republican Party is
dropping any regard for appearances in attacking the administration
is because if President Obama's reforms succeed, the Democratic
Party will stay in power for a long time.

On the other hand, if the reforms fail, the U.S. government will
face fiscal bankruptcy with the expansion of medical spending. It
will then be difficult to make achievements not only in domestic
politics but also in foreign affairs.

Q: How about the North Korean nuclear issue?

Okimoto: There has been a regression in this issue with North
Korea's successful nuclear tests in 2006 and 2009. The DPRK has
succeeded in improving the performance of its missiles. It is
believed that it has sold its nuclear technology to Syria, Burma
(Myanmar), and probably even Iran and Iraq.

The nuclear genie has been released from the lamp. In addition to
the five nuclear powers which are members of the Nuclear
Non-Proliferation Treaty (NPT), Israel, India, and Pakistan have
obtained a nuclear capability. Even North Korea is now a nuclear
power. Iran is moving in that direction and Syria will be interested
eventually. The NPT regime is disintegrating.

The question is whether North Korea can be made to abandon its
nuclear weapons. I think this will be impossible because nuclear
arms are its only deterrent against the United States and are
regarded as a symbol of power. Furthermore, in an actual war, North
Korea's energy supply will dry up immediately without China's aid.
Its only option is to rely on nuclear arms.

So, what is to be done? First, the U.S. should make efforts to
enhance the credibility of its expanded deterrence ("nuclear
umbrella").

If North Korea attacks South Korea or Japan, the U.S. must
retaliate. Furthermore, missile defense is needed in Japan to
prepare for a preemptive nuclear strike by the DPRK. The
proliferation of nuclear technology will spread the nuclear threat
beyond the neighboring countries. Expanded deterrence will not be
effective and it will be extremely difficult to stop its spread.

Second, the U.S. should not return to the negotiating table right
away just because the journalists detained by the DPRK were
released. Even if it negotiates with North Korea, this should only
be within the framework of the Six-Party Talks.

The Six-Party Talks participants need to clarify their individual
roles in the event of an internal collapse in the DPRK. They should
also discuss a new security framework for Northeast Asia.

Q: What will be the impact of the Japanese political situation on

TOKYO 00001926 003 OF 015

the Japan-U.S. relationship?

Okimoto: Even with a change of administration, the situation is
expected to be volatile in the next few years.

In the past few weeks, senior Democratic Party of Japan (DPJ)
officials have been making more moderate statements on the bilateral
alliance, including on the question of the relocation of Futenma Air
Station. The party appears to be aiming at a smooth transition of
government and preventing issues in managing the alliance from being
entangled with other reforms. It is trying to win popular support by
prioritizing the domestic economy and assisting child rearing. If it
tries to take on the revision of the Japan-U.S. Status of Forces
Agreement (SOFA) as well, it may have too much on its hands. If the
DPJ comes to power, it will be able to make achievements by
assessing the status quo first and developing a pattern of managing
the bilateral relationship in cooperation with the Obama
administration.

Q: What do you think of the present state of the alliance?

Okimoto: The situation is satisfactory, but there are areas where
new directions are possible. First, a broader concept of security
should be developed. It is necessary to include environmental
issues, global warming, aid to Africa, and other issues. This will
help prevent poverty, epidemics, natural disasters, and so forth
from aggravating conflicts, and become a force toward economic
recovery.

(2) Torn between "hatred" and "instability"

SANKEI (Page 1) (Abridged)
August 19, 2009

Masato Inui, political department director

After a long period of time following Prime Minister Taro Aso's
declaration of the dissolution of the House of Representatives on
July 13, the election campaign finally kicked off yesterday. I would
like to write that the historic campaign kicked off with the reins
of government at stake, but in reality, the outcome of this battle
is basically already determined.

Prime Minister Taro Aso's low popularity reflects not only the
people's discontent with his economic policy but also their hatred
of the government and the Liberal Democratic Party (LDP) which have
failed to drastically reform a variety of systems, including the
civil servant system. Since the Lower House dissolution, there have
been three chances for the LDP to turn the tables, but the party
failed to take advantage of them.

First, the party failed to produce a solid manifesto (campaign
pledges). To counter the Democratic Party of Japan's (DPJ)
pork-barrel policies, such as providing a child care allowance and
making all expressways toll free, the LDP came up with similar
policies that eventually deprived its manifesto of balance. From the
21st century ad hoc committee, the LDP manifesto got a score that
was even lower than the score for the DPJ manifesto which lacks
sufficient funding sources.

Second, the LDP failed to field strong candidates. The lineup of its
candidates running in the proportional representation section, which

TOKYO 00001926 004 OF 015

is nearly the same as that of the "postal election" four years ago,
is fatal. It is only natural for consumers to turn their backs on
the old-established store that sells out-of-season products while
bragging about its brand name.

Another fact is that Prime Minister Aso did not pay homage at
Yasukuni Shrine on Aug. 15. Aware of DPJ President Yukio Hatoyama's
eagerness to build a secular national memorial for the war dead, Aso
said, "(Paying tributes to the war dead) must be kept far away from
the political and media fuss." Many LDP supporters found this
comment disappointing. To any conservative lawmaker, paying homage
to those who sacrificed themselves for the country must be an
essential political act.

Armed with lackluster policies and candidates, the LDP is certain to
face an uphill battle. It can be said that the LDP's
self-destructive steps have set the stage for the establishment of a
DPJ-led administration.

At the same time, thanks to the long-running campaign, the
instability of a DPJ administration is already been felt.

Japanese flags were cut up to create the DPJ's insignia during a
meeting [in Kagoshima Prefecture]. This is not a minor incident by
any means. Disrespect for the national flag clearly shows the
instability of the DPJ which also includes former Japan Socialist
Party ranks who have opposed the national flag and the national
anthem.

President Hatoyama's inconsistent remarks on legislating the three
nonnuclear principles and his positive stance on granting local
voting rights to permanent foreign residents also fall in the realm
of instability. Management of the party is most unstable.

The process of determining the rankings of the candidates running in
the proportional representation section, which can dictate the fate
of the candidates, was a symbolic event. That work was left entirely
to Deputy President Ichiro Ozawa after Hatoyama and Secretary
General Katsuya Okada left the party headquarters on the night of
Aug. 17. Whom do the high-ranked candidates feel indebted to? The
answer is clear.

Torn between hatred of the LDP and apprehension about the DPJ, which
party will voters opt for? They could vote for other parties and
candidates. There are more than 10 days left for them to make up
their minds.

(3) "Ozawa children" to multiply in DPJ after general election

ASAHI (Page 4) (Excerpts)
August 20, 209

The Democratic Party of Japan (DPJ) is reported to be leading in the
general election. Because the party suffered a crushing defeat in
the 2005 general election, if it wins a majority of seats
single-handedly this time, the number of DPJ House of
Representatives members will increase by more than 100 percent. In
such a case, since many of the neophyte Diet members are close to
Deputy President Ichiro Ozawa, the size of the Ozawa group is
expected to be exceptionally big. This is likely to affect the
political dynamics inside the party.

TOKYO 00001926 005 OF 015

Recruitment of neophytes

The DPJ is fielding a total of 330 candidates in the forthcoming
general election - 113 of them served in the Diet until the recent
dissolution; 53 are former Diet members; and 164 are first-timers.
If the DPJ wins and succeeds in taking over power, there will be a
large number of neophyte Diet members. In the event the party wins
241 seats, giving it majority control, there will be at least 75
neophytes even assuming all the former Diet members get elected.
This will mean that at least 30 percent of DPJ legislators will be
neophytes.

Senior officials of the various groups in the party are campaigning
very hard right now, bearing in mind the influence of their group in
the party after the election.

However, Ozawa, who is deputy president in charge of elections,
enjoys an exceptional advantage since he has been solely responsible
for recruiting candidates since his days as party president. He
often sends his personal secretaries to the neophyte candidates to
give them campaign advice and has been expanding his influence in
this manner.

The 38 new House of Representatives members elected during the 2007
Upper House election are called "Ozawa children," and Ozawa
exercises great influence on them. As of now, the Ozawa group has a
membership of around 50. However, one mid-ranking member says that
"this number will increase to around 100 after the election." It
appears that a solid political base for Ozawa's "return to power"
will be established.

The Ozawa group has its roots in the former Tanaka faction, which
ruled the Liberal Democratic Party (LDP) for many years. It boasts
of solid unity, a team of capable secretaries, and abundant
political funds. The other groups in the DPJ, unlike the LDP
factions, are loose organizations which will not be able to compete
with Ozawa. Another senior DPJ official expresses concern that, "If
he has enough people, it is also possible that Mr. Ozawa may leave
the party to become a third force, in order to hold the casting vote
in political maneuverings."

(4) 2009 Lower House election: Target for seats and simulation of
three political situations

NIKKEI (Page 3) (Full)
August 19, 2009

The House of Representatives election on Aug. 30 holds the
possibility of determining the framework for the future government.
The main focus of attention is on whether the coalition government
of the Liberal Democratic Party (LDP) and New Komeito will continue
to exist or a government led by the Democratic Party of Japan (DPJ)
will come into being. Depending on the outcome of the election, it
is conceivable that the political situation will become chaotic and
political realignment will occur. The newspaper envisions three
possible scenarios.

Case 1: A DPJ-led administration

DPJ President Yukio Hatoyama clearly said in a debate on Aug. 12
with Prime Minister Taro Aso.

TOKYO 00001926 006 OF 015

"Regardless of how many Lower House seats the DPJ will win, I want
to take action along with the Social Democratic Party (SDP) and
People's New Party (PNP) with an eye on a coalition government of
the three parties."

If his remarks are taken at face value, a DPJ administration or a
DPJ-SDP-PNP coalition government will be inaugurated.

The three parties are gradually making strategic moves in an effort
to form a coalition government. They unveiled on Aug. 14 their
common policies, which will become the basis for consultations on
the formation of a coalition government. The common policies include
a policy of drastically shifting from the structural reform policy
the LDP-New Komeito government has implemented since the Koizumi
administration, including a substantial review of the postal
services and abolition of the health care system for people aged 75
and older.

However, diplomatic and security policy could become a source of
contention for the three parties. Hatoyama plans to go along with
cargo inspections onboard ships going in and out of North Korea, as
well as the Self-Defense Forces' antipiracy mission in seas of
Somalia. However, the SDP has opposed any oversees deployment of the
SDF.

The DPJ needs to form a coalition with the SDP and PNP because it
does not have a majority in the House of Councillors. Hatoyama,
appearing on an NHK program on the evening of Aug. 18, stated: "Even
if we increase the number of Lower House seats, we will not be able
to hold a majority without the cooperation of the SDP and PNP."

The DPJ has 108 Upper House seats, excluding Upper House President
Satsuki Eda, of the 240 (two vacancies). The joint parliamentary
group of the DPJ, PNP, and New Party Nippon has 118 seats, three
seats short of a majority, which is necessary for the Diet vote on
the prime minister and enacting bills.

On Aug. 15, Makiko Tanaka and her husband Naoki Tanaka announced
that they have joined the DPJ. If the DPJ holds a single-party
majority in the Upper House, increasing its seats in next year's
election, the necessity for it to link up with the SDP and PNP will
weaken. If so, the three-party coalition would be undermined.

Case 2: If LDP-New Komeito coalition government continues, ending
the "politically divided Diet situation" will be difficult

Aso stressed on an NHK program on Aug. 18: "It will be a big
challenge for the LDP and New Komeito to win a majority of 241
seats. In order to achieve that goal, I want to do my best." If the
LDP and New Komeito maintain a majority in the upcoming snap
election, the framework of the present administration will not
change.

However, the lopsided Diet situation will continue because the
opposition camp holds a majority in the Upper House. In this
situation it will be difficult for the LDP and New Komeito to gain
more than two-thirds of Lower House seats, which is necessary for
the lower chamber to re-adopt bills voted down in the Upper House.
Therefore, Diet deliberations are certain to face dead-ends.

The LDP and New Komeito have 103 Upper House seats, including Vice
President Akiko Santo. Even if four seats, including Hideo Watanabe,

TOKYO 00001926 007 OF 015

who bolded the DPJ and Reform Club members, are added to the 103,
the LDP and New Komeito are 14 seats short of the 107, a majority of
the Upper House. It is conceivable that the two parties will try to
cut into independent and DPJ Upper House members, but will not be
that easy to dissolve the current political divided Diet situation.

Case 3: If both ruling and opposition camps fail to secure a
majority in the Lower House, there will be a possibility for
political realignment

What will happen if both the ruling LDP-New Komeito camp and the
opposition DPJ-SDP-PNP bloc fail to win a majority in the Lower
House election?

It is safe to say that the two sides will desperately try to win as
many Lower House seats as possible on their sides. So, an unstable
political situation will likely continue for the time being.

Chances are that Your Party and a group led by Takeo Hiranuma,
former international trade and industry minister, will hold the
casting vote. In addition, the DPJ is expected to cut into the
liberal group in the LDP, while the LDP is expected to cut into the
conservative force in the DPJ.

The JCP's moves could also change the situation. JCP Chairman Kazuo
Shii stated on his party's response to the Diet vote for the prime
minister: "It may well be that we will vote for the DPJ in the final
round of voting." Regardless of whichever side takes the political
helm, a minority government will be launched. Therefore, the
possibility will likely become stronger that political realignment
will occur.

(5) Political parties vying for 10 million unaffiliated votes

NIKKEI (Page 2) (Abridged)
August 19, 2009

The Liberal Democratic Party (LDP) and the Democratic Party of Japan
(DPJ) are clashing over policy in the campaign for the Aug. 30 House
of Representatives election.

"I was defeated despite your strong support," said Shigeru Uchida at
an election strategy meeting on Aug. 10 chaired by Finance Minister
Kaoru Yosano. "I am very sorry." Uchida was beaten in the race for
Chiyoda Ward in the Tokyo metropolitan assembly election by
Yoshiyuki Kurishita, a 26-year-old DPJ-endorsed first-time
candidate. Kurishita revealed his intention to run just before the
official announcement of the election.

Chiyoda Ward is an LDP stronghold in the Tokyo No. 1 District, from
which Yosano is running in the Lower House election. The defeat of
Uchida, an LDP heavyweight, shocked the party. The Uchida camp was
distraught by the fact that he garnered nearly 1,000 more votes than
in the previous election but was still defeated. Taking into account
such factors as increases in population and in voter turnout by 12
percentage points, the LDP calculates that more than 80% of the
6,000 floating votes went to the DPJ.

The outcome of this contest is hard to fathom. Uchida grumbled,
"People tend not to choose on the basis of policies or achievements
but rather as they would choose fashions, swayed but what is in

TOKYO 00001926 008 OF 015

vogue." Yosano is aiming to attract unaffiliated voters by resorting
to such tactics as delivering stump a speech from the deck of a boat
as it sails down a canal within view of high-rise condominiums. Many
of their residents are swing voters.

Kurishita engaged in a short-term campaign. He visited nursery
schools with the aim of attracting the generation raising children.
The strategy of attempting to attract citizens who have not voted in
the past rather than rely on the party has also been adopted by
Banri Kaieda, a rival of Yosano in the upcoming Lower House
election.

With the political winds blowing in its favor, the DPJ decided to
field Makoto Yamazaki, a Yokohama assembly member, as its candidate
in the Kanagawa No. 8 district in the Lower House election.

"Copies of the [DPJ's] manifesto are available." So reads a banner
flying in front of Yamazaki's campaign office. Yamazaki is not yet
widely known, but a number of people have visited the office to pick
up a copy of the manifesto. When he stumps in front of stations, he
distributes copies along with his name card. He is singling out
unaffiliated voters who live in Yokohama but commute to Tokyo.

(6) Pre-election poll on public trends

TOKYO SHIMBUN (Page 11) (Full)
August 18, 2009

Questions & Answers
(Figures are percentages. Figures in parentheses denote the results
of the last survey, conducted Aug. 8-9.)

Q: To what extent are you interested in the upcoming general
election for the House of Representatives?

Very interested 47.1 (47.1)
Somewhat interested 40.2 (40.6)
Not very interested 9.9 (9.9)
Not interested at all 2.4 (2.4)
Don't know (D/K) + no answer (N/A) 0.4 (---)

Q: Which political party's candidate are you going to vote for in
your single-seat constituency in the general election?

Liberal Democratic Party (LDP) 18.8 (14.8)
Democratic Party of Japan (DPJ or Minshuto) 34.1 (35.2)
New Komeito (NK) 3.0 (2.2)
Japanese Communist Party (JCP) 2.4 (2.4)
Social Democratic Party (SDP or Shaminto) 0.5 (0.5)
People's New Party (PNP or Kokumin Shinto) 0.5 (1.0)
Your Party (YP or Minna no To) 0.3 (---)
Reform Club (RC or Kaikaku Kurabu) --- (---)
New Party Nippon (NPN or Shinto Nippon) --- (---)
Other political parties, groups 0.4 (0.1)
Independent candidate 0.3 (1.8)
None 3.2 (4.5)
Undecided 34.2 (36.4)
D/K+N/A 2.3 (1.1)

Q: Which political party are you going to vote for in your
proportional representation bloc?

TOKYO 00001926 009 OF 015

LDP 16.5 (13.3)
DPJ 32.6 (34.1)
NK 4.9 (3.8)
JCP 3.8 (3.6)
SDP 1.1 (1.4)
PNP 0.9 (0.7)
YP 0.7 (---)
RC --- (---)
NPN 0.2 (---)
Other political parties, groups 0.2 (0.2)
None 1.7 (3.6)
Undecided 35.1 (38.0)
D/K+N/A 2.3 (1.3)

Q: What do you weigh the most when you vote in the general
election?

Social security, such as pension and healthcare 40.5 (38.9)
Economy, job security 32.1 (33.3)
Taxation, such as consumption tax 8.2 (8.4)
Decentralization, administrative reform 6.0 (5.2)
Constitutional reform 0.6 (1.8)
Foreign relations, national security 2.5 (2.6)
Politics and money 4.0 (4.4)
Political pedigree 0.5 (1.1)
Other answers 1.9 (0.6)
D/K+N/A 3.7 (3.7)

Q: Are you going to vote in the upcoming election?

Yes for sure (including early voting) 77.5 (76.2)
Yes if possible 17.6 (20.2)
No 4.5 (2.9)
D/K+N/A 0.4 (0.7)

Q: What form of government would you like to see after the next
general election?

LDP-led coalition government 18.2 (17.0)
DPJ-led coalition government 40.8 (40.9)
LDP-DPJ grand coalition 11.9 (12.0)
New framework through political realignment 17.3 (18.8)
D/K+N/A 11.8 (11.3)

Q: When comparing Prime Minister Taro Aso and DPJ President Yukio
Hatoyama, who do you think is more appropriate for prime minister?

Taro Aso 19.5 (19.8)
Yukio Hatoyama 48.6 (49.5)
D/K+N/A 31.9 (30.7)

Q: Is there a political party you usually support?

Yes 30.7 (29.9)
No 68.3 (69.6)
D/K+N/A 1.0 (0.5)

Q: (Only for those who answered "yes" to the foregoing question)
Then, which political party do you support?

LDP 46.9 (45.4)

TOKYO 00001926 010 OF 015

DPJ 29.0 (30.0)
NK 9.9 (8.4)
JCP 8.4 (9.9)
SDP 2.3 (3.3)
PNP 1.7 (---)
YP --- (---)
RC --- (---)
NPN --- (---)
Other political parties, groups --- (0.3)
D/K+N/A 1.8 (2.7)

Q: (Only for those who answered "no" to the foregoing question) If
you were to support a political party, which political party would
you like to choose?

LDP 18.0 (17.6)
DPJ 36.6 (37.9)
NK 2.2 (1.7)
JCP 2.1 (2.7)
SDP 0.6 (1.3)
PNP 0.4 (0.8)
YP 0.7 (---)
RC 0.1 (---)
NPN 0.1 (---)
Other political parties, groups 0.2 (0.4)
Still none 37.8 (35.8)
D/K+N/A 1.2 (1.8)

Q: Do you support the Aso cabinet?

Yes 18.5 (7.7)
No 71.2 (72.9)
D/K+N/A 10.3 (9.4)

Polling methodology: This survey was conducted across the nation on
Aug. 15-16 by Kyodo News Service on a computer-aided random digit
dialing (RDD) basis. Among randomly generated telephone numbers,
those actually for household use with one or more eligible voters
totaled 1,763. Answers were obtained from 1,236 people.

(7) Yellow light for Japan's fighter production

NIKKEI (Page 11) (Full)
August 20, 2009

The yellow light is on for Japan's continued production of fighter
jets. The Air Self-Defense Force has been procuring F-2 fighter
support planes, and this F-2 acquisition plan is set to end in
fiscal 2011. Before that, however, Lockheed Martin Corporation,
which produces the wings and some other components for the F-2, will
close its production line this month. If that is the case, it will
be difficult for the ASDF to continue its procurement of F-2 fighter
jets. Consequently, Mitsubishi Heavy Industries, Ltd. (MHI) will
also have to end its F-2 assembly in fiscal 2011.

The ASDF is currently in the process of selecting the follow-on
fighter support (FX) plane model to replace the F-2. Japan's
licensed production of the FX model, however, will start in fiscal
2018 or later. The ASDF will inevitably have a considerable blank
period of time until then, so MHI deems it difficult to maintain its
production setup.

TOKYO 00001926 011 OF 015

The F-2, which attracted a lot of attention as the FSX when planned,
was co-developed by Japan and the United States. MHI and other
Japanese contractors have taken on 60% of its production, with
Lockheed Martin and other U.S. contractors having undertaken 40%.
The ASDF had initially planned to introduce a total of 141 F-2 jets.
However, F-2 production has now been reduced to 94 due to cuts in
the defense budget and for some other reasons. The F-2 was last
ordered in fiscal 2007, and the last batch of F-2 jets will be
delivered in fiscal 2011. Lockheed has now completed its production
of components for the last F-2 jets and will remove the production
line from its Texas factory this month.

Japan's production of fighter planes once ceased after its August
1945 defeat in the war. In the 1950s, Japan resumed producing
fighter planes. This production played a major role in introducing
technical know-how for engines and fuselages. Of late, it has
brought about derivative effects as seen from its development of
technologies like molding composite materials for passenger planes
and automobiles. So, what will happen if Japan discontinues its
production of fighter jets? In that case, one of the possible
consequences is that Japan will not be able to hand down its
technical know-how for the development and production of fighter
jets. For this reason, MHI has asked the Defense Ministry and
Lockheed to prolong the F-2's production.

Japan's defense industry has been attaching expectations to the FX
for Japan's continued production of fighter jets. However, Japan has
been falling behind in its screening of candidate models. The F-22,
a U.S.-developed state-of-the-art stealth fighter, was the most
likely candidate for the FX, and Tokyo asked Washington for the
F-22. However, the United States is highly likely to discontinue its
F-22 production. At this point, the F-35, now being co-developed by
nine countries including Britain and the United States, is a likely
candidate.

Japan's licensed production is reportedly more likely to be
authorized for the F-35 than in the case of the F-22. However, the
F-35's actual deployment is still far ahead in the future. Even if
Japan is allowed to produce F-35s under license, it looks like their
first delivery to the ASDF will be in around 2018. If there is no
delivery for seven years, it is uncertain whether the ASDF can
prepare alternatives.

Japan's aviation industry has depended on the Self-Defense Forces
for projects. However, the SDF has no plans for now to develop new
aircraft. One person from the aviation industry voiced concern,
saying: "The way things are going, Japan's technology will decline."
In recent years, the biggest project was Kawasaki Heavy Industries'
development of the XP-1 patrol aircraft (formerly called the PX) and
the CX cargo aircraft. The CX, however, showed poor results in its
strength test, so it has not yet made its first flight.

(8) Escalating nuclear power generation business: Japan, U.S., and
Europe battling for [nuclear reactor] orders (Part 1)

Yomiuri (Page 8) (Full)
August 20, 2009

Nuclear power plant construction projects are thriving worldwide in
response to the global warming issue and a surge in emerging
nations' energy demand. Japanese manufacturers, which are proud of
their technological capabilities, aim to expand business

TOKYO 00001926 012 OF 015

opportunities, while the United States and European countries,
private sector as well as public sector, are battling to get orders.
In this article, we will introduce the current situation of the
escalating nuclear power generation business.

"A nuclear power plant will create vast amounts of exports,
employment, and the huge amount of energy that Indian people need" -
U.S. Secretary of State Hillary Clinton reiterated the importance of
a nuclear power plant in India when she visited the country on July
20. U.S. companies aim to receive orders for two nuclear power
plants planned for construction in India. The United States aims to
beat out European companies, which are taking the lead with
government support.

France is also working hard on "nuclear power plant diplomacy."
French President Nicolas Sarkozy visited the United Arab Emirates
(UAE) in May to attend an opening ceremony of a French military
base. President Sarkozy intends to deepen France's relationship with
the UAE through the military base and gain an upper hand in securing
orders for three or four nuclear power plants, which will start
operation by 2020. The French Government offered to construct a
branch of the Louvre Museum [in Abu Dhabi]. Some call the offer a
"bait to secure orders" (Japanese company).

The escalating sales activities of leaders of the United States and
Europe indicate a growing movement in the world to return to nuclear
power.

The United States refrained from building nuclear power plants after
the Three Mile Island accident in 1979, but shifted its policy in
2002. Projects are now underway to build more than 30 new plants.
European nations took a policy of abandoning nuclear power plants
after the Chernobyl accident in 1986, but they have also altered
their policies. One after another, the United Kingdom, Italy, and
Sweden decided to permit the construction of nuclear power plants.

As of January 2009, about 120 nuclear power plants are either being
constructed or planned, meaning that there will be a 30% increase in
the number of nuclear power plants in the world (432 plants).

The biggest factor is the expected chronic power shortage due to a
sharp increase in emerging countries' energy demand. Even if China
operates 11 nuclear power plants, it will only cover 2% of its
domestic energy production. It has also been pointed out that a
nation's desire to secure energy on its own causes a surge in energy
security awareness. Another factor is that [nuclear power
generation] has a merit in countering global warming in that it
emits much less carbon dioxide than fossil fuel.

There are three main groups contending for projects: Toshiba
Corporation and U.S. Westinghouse Electric (WH); Hitachi, Ltd. and
U.S. General Electric; and Mitsubishi Heavy Industries, Ltd. and
French Areva. Japanese companies are involved in all of these
groups. The cost to construct a large nuclear power plant is about
400 billion yen. There is a chance for Japanese companies to
develop it into a huge business. Toshiba expects nuclear
power-related sales to double to 15 trillion yen by fiscal 2015.
Other companies are also showing enthusiasm by saying that "Japanese
companies have continued to construct and operate nuclear power
plants. We can take advantage of our strength." (Hitachi senior
official)

TOKYO 00001926 013 OF 015

However, it remains unknown whether things will proceed according to
plan. The United States froze a construction plan for a final
disposal site for spent nuclear fuel in Nevada in May due to
pollution concerns. The global recession as well as a deep-seated
nuclear allergy is also casting a shadow. Investment risk is a
burden for companies, which are stuck in weak business performance.
Deteriorating finances will be an obstacle to receiving government
assistance. The future of the nuclear power business is still a
mixture of hopes and concerns.

(9) TOP HEADLINES

Asahi:
Poll: DPJ likely win 300 seats in Lower House election

Mainichi:
LDP, DPJ show clear differences in views on diplomacy, economy

Yomiuri:
Election campaign hit by new flu epidemic

Nikkei:
Next-generation traffic system to be introduced to avoid jams,
accidents

Sankei:
Manifestos of DPJ, LDP: DPJ puts off system reforms to four years
from now; LDP to shorten period for comparing pension records to
next year?

Tokyo Shimbun:
GHQ's counterfeit bill operation against North Korea during Korean
War

Akahata:
JCP Chairman Shii shows future of Japan and JCP's position of being
constructive opposition party

(10) EDITORIALS

Asahi:
(1) Will the 2009 general election free Japan from the spell of
"postwar diplomacy"

Mainichi:
(1) Positive economic growth: Time to strengthen the foundation of
the economy
(2) Is the DPJ serious about measures for the disabled? (By Kazuhiro
Nozawa)

Yomiuri:
(1) Agricultural policy: Strengthening the foundation of Japanese
agriculture should be top priority
(2) The passing of Kim Dae Jung: Verdict still out on the Sunshine
policy

Nikkei:
(1) Discussion of the substance of "political leadership" necessary
(2) New-type flu epidemic

Sankei:

TOKYO 00001926 014 OF 015

(1) How does DPJ view the national flag?
(2) The unfinished business of Kim Dae Jung's conciliatory policy

Tokyo Shimbun:
(1) New-type of flu: People with underlying conditions should take
precautions
(2) 2009 Lower House election: Political parties should compete in
strategies for nurturing the next generation

Akahata:
(1) The most important thing is to improve people's livelihoods

(11) Prime Minister's schedule, August 19

NIKKEI (Page 2) (Full)
August 20, 2009

08:10
Departed from Haneda Airport on JAL 1151.

09:26
Arrived at Obihiro Airport [in Hokkaido].

10:11
elivered a stump speech at the north exit of JR Obihiro Station.

10:48
From the station placed telephone calls to the LDP candidates.

14:07
Delivered a stump speech in front of Asshu in Asahikawa.

14:30
Left JR Asahikawa on Super-Kamui 34.

15:51
Arrived at JR Sapporo Station.

16:02
Delivered a stump speech at an intersection in Sapporo.

17:43
Departed from Chitose Airport on JAL 528.

18:57
Arrived at Haneda Airport.

19:41
Arrived at his official residence.

(Corrected copy) North Korea was prepared to reinvestigate
abductions, but aborted due to PM Fukuda's resignation

ASAHI (Page 4) (Excerpts)
August 20, 2009

It was learned that based on an agreement at the Japan-DPRK working
level talks in August 2008, North Korea had decided to launch a
committee to reinvestigate the abduction issue in early September
2008. A specific date had also been fixed through coordination with
the Japanese side. However, shortly before the committee was to be
launched, then Prime Minister Yasuo Fukuda announced his resignation

TOKYO 00001926 015 OF 015

on September 1, which prompted the North Koreans to suspend the
plan. There is a view within the Japanese government that if Fukuda
had not resigned, the reinvestigation might have started.

According to a government source, after the bilateral talks in
Shenyang, China, on August 11-12, 2008, a date for launching the
committee was determined through coordination between the two sides.
Fukuda had also approved of the plan after receiving a report from
the Ministry of Foreign Affairs.

However, Fukuda announced his resignation right before the
committee's launch. The North Koreans then notified the Japanese
government of its decision to "postpone the start of the
reinvestigation until we can determine how the new administration
will handle the matters agreed upon at the working level talks." The
above government source noted that "the investigation committee was
just about to be launched." It is believed that the DPRK had had
great expectations of the Fukuda administration, which had shown
enthusiasm about normalizing bilateral relations.

Since the start of the Aso administration, the government has asked
North Korea repeatedly to launch a reinvestigation, telling it that
"the policy on implementing the agreement remains unchanged." While
the DPRK has not negated the previous agreement, it has not made any
specific response.

The dominant view in the Japanese government right now is that
"North Korea will not take any action at least until the DPRK policy
of the new administration formed after the general election becomes
clear." Since North Korean issues are expected to proceed with the
U.S. and the DPRK as the main players from now on, strengthening
cooperation with the U.S. for a solution to the abduction issue will
also be an issue for the new administration.

ROOS

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