JAPANESE MORNING PRESS HIGHLIGHTS 10/25/07

UNCLAS SECTION 01 OF 10 TOKYO 004976 SIPDIS SIPDIS DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA; WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST DIVISION; TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS OFFICE; SECDEF FOR JCS-J-5/JAPAN, DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR; CINCPAC FLT/PA/ COMNAVFORJAPAN/PA. E.O. 12958: N/A TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 10/25/07 Index: Ambassador Schieffer at the Japan National Press Club (JNPC): 1) Ambassador Schieffer is concerned that stoppage of MSDF refueling in Indian Ocean will give world impression that Japan leaving war on terror (Yomiuri) 2) Schieffer confident that US had fulfilled its responsibility by answering questions about MSDF refueling operation in the Indian Ocean (Asahi) 3) Schieffer criticizes Democratic Party of Japan (DPJ) during JNPC speech (Mainichi) Maritime Self-Defense Force (MSDF) refueling operation: 4) Ambassadors from 11 countries participating in Indian Ocean OEF/MIO will brief Diet members on Oct. 31 (Yomiuri) 5) MSDF will receive order on Nov. 1 to withdraw from Indian Ocean (Tokyo Shimbun) 6) DPJ counterproposal to government's MSDF refueling bill is limited to civilian aid in Afghanistan (Sankei) 7) DPJ to postpone submitting its own bill designed to counter government's new antiterrorism bill (Yomiuri) Defense Ministry scandal: 8) Former Vice Defense Minister Moriya to hit the witness stand in the Diet on Oct. 29 (Asahi) 9) How much Moriya's testimony in the Diet will clear up allegations of collusion with defense contractor is unknown (Tokyo Shimbun) 10) Former defense contractor with close ties to Moriya skimmed off 30 million yen from the company that remains unaccounted for (Asahi) 11) Pentagon promotes Asia-specialist Shinn to assistant secretary level; Defense Secretary's Japan visit set for Nov. 7-9 (Nikkei) 12) Futenma relocation talks involving chief cabinet secretary and state minister meeting Okinawa officials to restart next month (Yomiuri) 13) Association of members of families of abductees to meet Prime Minister Fukuda tomorrow to press for a continued hard-line stand toward North Korea (Sankei) 14) Japan denies Moscow report that it had floated a new proposal on the northern islands (Yomiuri) 15) Former postal rebel Hiranuma, who was booted out of the LDP by then Prime Minister Koizumi, may form new conservative party (Sankei) 16) Former and current Health Minister square off in Diet over new "tainted-blood" issue (Tokyo Shimbun) 17) US fund Blackstone, known as the world's largest, is heading toward Japan (Sankei) Articles: 1) US ambassador to Japan concerned that halting MSDF refueling operation in Indian Ocean will give impression Japan is leaving the war on terror YOMIURI (Page 2) (Full) October 25, 2007 TOKYO 00004976 002 OF 010 In a speech at the Japan National Press Club yesterday, US Ambassador to Japan Schieffer expressed strong concern about the growing possibility that Japan would halt the Maritime Self-Defense Force's (MSDF) refueling services in the Indian Ocean. He said: "It would send the wrong message to the international community and to terrorists. It would give the impression that Japan was withdrawing from the war on terror." He once more denied the allegation that Japan had diverted fuel provided to US warships to the Iraq war, saying: This is an issue connected to the credibility of the US. The US has investigated a large amount of documents and reached the conclusion that there was no diversion of fuel. That should be sufficient." He also leveled criticism at the Democratic Party of Japan (DPJ) and the rest of the opposition camp: "No matter what kind of explanation we give, there will be those who will be dissatisfied for political reasons. There is nothing that America can do to change the thinking of such people." 2) "The US government has accounted for the fuel," says US ambassador on diversion allegation ASAHI (Page 4) (Full) October 25, 2007 US Ambassador to Japan J. Thomas Schieffer delivered a speech at the Japan National Press Club yesterday. Touching on allegations that fuel provided to a US oiler by the Maritime Self-Defense Force in the Indian Ocean was diverted for use in the Iraq operations, the ambassador said: "We have accounted for the oil. I believe we have answered the questions asked." He also indicated that the statement released last week by the US Department of Defense is a de facto final response, saying: "The government has concluded that there was no diversion after analyzing thousands of documents. I think that is sufficient." In the statement, the Pentagon, while denying any diversions, admitted difficulty in tracking fuel in the event of oilers and vessels engaged in multiple missions. As grounds for denying diversion, the ambassador simply said: "We know the amount of fuel from Japan. In view of that, it is clear that (Japanese oil) was used for Operation Enduring Freedom (against terrorism)." The ambassador strongly called for a continuation of the refueling operation, noting: "If Japan halts the refueling operation, that would end up sending the wrong message to the terrorists. That would leave the impression that Japan is withdrawing from the war on terror." About the concern that the abduction issue would be left unattended behind advanced US-DPRK relations, the US envoy also stated: "The United States' stance toward the abduction issue has not changed. I don't think this issue will divide the United States and Japan." 3) US ambassador criticizes DPJ over fuel diversion allegation MAINICHI (Page 5) (Full) October 25, 2007 US Ambassador to Japan J. Thomas Schieffer yesterday delivered a speech at the Japan National Press Club in Chiyoda Ward, Tokyo. The ambassador tacitly criticized the Democratic Party of Japan in TOKYO 00004976 003 OF 010 connection with alleged diversion of oil provided by the Maritime Self-Defense Force in the Indian Ocean, saying: "There is no need to receive fuel from Japan for the war in Iraq. Those who are still not convinced (even after information was disclosed) are probably not satisfied for political reasons." 4) Ambassadors from various countries to express support for continuation of Japan's refueling operations: Briefing for lawmakers to be held on Oct. 31 YOMIURI (Page 4) (Full) October 25, 2007 Ambassadors from countries that are participating in the Maritime Interdiction Operations (MIO) in the Indian Ocean will hold a briefing for lawmakers of both the ruling and opposition camps at a facility of the Canadian Embassy in Akasaka, Tokyo. The aim is to indirectly support passage of Japan's new antiterror special measures bill, by seeking understanding for continuation of the Maritime Self-Defense Force's refueling operations, part of the MIO. US Ambassador to Japan Schieffer, Canadian Ambassador Joseph Caron, as well as military attaches of various countries will take part in the briefing. 5) MSDF pullout order to be issued on Nov. 1 TOKYO SHIMBUN (Page 2) (Full) October 25, 2007 The Antiterrorism Special Measures Law, which has been the legal basis for the Maritime Self-Defense Force's refueling operation in the Indian Ocean, is slated to expire on Nov. 1. For this reason, the government yesterday outlined an MSDF withdrawal timetable, including the issuance of a pullout order by Defense Minister Shigeru Ishiba on Nov. 1. With the law's expiration only a week away, there is no prospect that new antiterrorism legislation will pass the Diet. Given the situation, the government will begin work for discontinuing the refueling operation. The MSDF vessels are scheduled to depart for Japan before dawn of Nov. 2 to return home in late November. The dispatched unit is composed of the supply ship Tokiwa and the destroyer Kirisame and some 340 personnel. The unit, which left Japan this July, has been engaged in the refueling operation in the Indian Ocean since August. If the Antiterrorism Law had been extended, they were supposed to provide services until around January. But because the government has given up on the law's extension and submitted a new bill to the Diet, the unit's term has been shortened to Nov. 1. The unit will continue refueling foreign vessels until the deadline while making preparations for the pullout. In the event the new legislation passes the Diet early, the unit that will be cruising toward Japan is expected to head back toward the Indian Ocean after receiving an order from Defense Minister Ishiba. The MSDF's Indian Ocean mission started in November 2001 under the current Antiterrorism Law. As of August 31, 2007, the MSDF provided some 480,000 kiloliters of oil on 777 occasions at a total cost of TOKYO 00004976 004 OF 010 over 22 billion yen. 6) DPJ's antiterrorism bill to limit operations in Afghanistan to public welfare area SANKEI (Page 5) (Full) October 25, 2007 The Democratic Party of Japan started a discussion in an executive meeting of its foreign and defense affairs committees on its own bill to counter the government's new antiterrorism special measures bill. The draft bill that was spelled out in the meeting specifies that assistance in Afghanistan should be limited to the public welfare area, dismissing Japan's participation in peacekeeping operations (PKO). On the propriety of the dispatch of Self-Defense Force (SDF),the draft includes measures to dispatch SDF to Afghanistan to join UN PKO, as well as to reassign SDF personnel to other organizations, like the Japan International Cooperation Agency (JICA),to engage in aid operations as civilians. 7) DPJ to put off finalization of counterproposals to new antiterror legislation, prioritizing pursuit of scandal involving Moriya YOMIURI (Page 4) (Full) October 25, 2007 The Democratic Party of Japan (DPJ or Minshuto) yesterday put off the finalization of proposals countering the ruling camp-sponsored new antiterror special measures bill until next week or later. This is because it wants to prioritize pursuit of former Administrative Vice Defense Minister Takemasa Moriya over his improper relations with a defense-related trading house and the correction of the amount of fuel the Maritime Self-Defense Force supplied to a US oiler. The DPJ at first planned to finalize counterproposals at a meeting of the Foreign and Defense Affairs Division within this week. However, it actually went no further than listening to explanations on the correction to the amount of fuel provided by the Defense and Foreign Ministries during the meetings held on Oct. 23-24. It plans to listen to circumstances from both ministries at a meeting on the 25th as well, instead of discussing the finalization of counterproposals. In the meantime, the DPJ's Project Team to Shed Light on Scandals Involving the Defense Ministry, set up both in the Lower and Upper Houses, held their first meetings in the Diet yesterday. The Lower House team confirmed their determination to collect information in the run-up to the summoning of Moriya as a sworn witness on the 29th. The Upper House team decided to call for summoning Moriya to the Budget Committee as well as to the Foreign Relations and Defense Affairs Committee as a witness. The DPJ has put off the finalization of counterproposals, because it finds it difficult to consolidate views of party members on the dispatch of Self-Defense Force troops to Afghanistan. It has judged that it would not be wise to create a fissure by discussing the matter, according to a senior member. Scandals involving Moriya then surfaced conveniently for the DPJ. Policy Research Committee Chair Naoshima yesterday told a news conference, "We are now discussing counterproposals in a cautious TOKYO 00004976 005 OF 010 manner due to changes in the political situation." He thus indicated that the DPJ will take time to compile counterproposals. 8) Moriya to be summoned to testify in Diet on Oct. 29 YOMIURI (Page 2) (Slightly abridged) October 25, 2007 The House of Representatives Special Committee on Prevention of Terrorism, chaired by Takashi Fukaya, decided yesterday to summon former Administrative Vice Defense Minister Takemasa Moriya to the Diet as a sworn witness. The session will begin at 1:00 p.m. on Oct. ¶29. Moriya has been criticized for his inappropriate ties with a defense equipment trading house. The ruling and opposition parties also agreed in a meeting of the committee's executives to hold a question-and-answer session on the 26th on the new antiterrorism special measures bill with the presence of Prime Minister Yasuo Fukuda. Regarding the issue of the Defense Ministry having underreported the fuel Japan supplied to US supply ships (in 2003),the ruling and opposition parties have decided to continue deliberations on whether to summon to the Diet the Maritime Staff Office Operations and Plans' division director, who was serving in the post in 2003 and whom the opposition bloc has called for a summoning along with Moriya. Although the ruling coalition aims to pass the new antiterrorism bill through the House of Representatives in early November, it remains to be seen if the bill will even clear the Lower House as the ruling camp hopes. The expectation is that in Moriya's testimony the focus will be on whether he was involved in the ministry's purchase of defense equipment from the defense equipment trader Yamada Yoko Corp., in addition to his golfing and dining and wining with a former trade house executive. It will be the first time in 19 years for a former vice minister to be summoned to the Diet since former vice education minister Kunio Takaishi and former vice labor minister Takashi Kato gave testimonies in 1988. The opposition camp had opposed the holding of deliberations on the new legislation before summoning them, but they agreed to hold on the 26th a question-and-answer session by representatives from the ruling bloc and on 30th, after the summoning, a question-and-answer session by opposition representatives. The ruling coalition will hold question-and-answer sessions every day after the 30th, aiming at passing the legislation through the Lower House by the end of the current Diet session, on Nov. 10, to send it to the Upper House. However, the opposition's position is that the testimony by Moriya is the start of shedding light on the Moriya scandal. Besides testimony by the former Maritime Staff Office division director, the opposition side intends to demand that Moriya give testimony at the Upper House Foreign Affairs and Defense Committee. Many observers predict nothing will turn out as the ruling coalition plans. A senior Liberal Democratic Party (LDP) member said yesterday: "Nobody knows what may happen tomorrow. We have no choice but to walk ahead step by step." TOKYO 00004976 006 OF 010 Prime Minister Fukuda told reporters last night: "I must try my best under the given situation." 9) Moriya to be questioned in Diet over cozy ties with contractor, error cover-up TOKYO SHIMBUN (Page 2) (Excerpts) October 25, 2007 Scandal-tainted former Administrative Vice Defense Minister Takemasa Moriya will be summoned to the Diet as a sworn witness on Oct. 29. The opposition camp is ready to question him over his cozy ties with Yamada Yoko Corp., a trading firm specializing in defense and aircraft equipment, and his possible involvement in the cover-up of an error in records of refueling. The focus of attention is on to what extend the opposition bloc will be able to unveil how Moriya was exerting influence in the Defense Ministry from a position responsible for defense policymaking for many years. Democratic Party of Japan (DPJ) Diet Affairs Committee Chairman Kenji Yamaoka said in a press conference yesterday: "In the Defense Ministry, there is a suspicious syndicate. Former Vice Defense Minister Moriya was at the center of it." He then stressed he would zero in on the ministry's structural problems through questioning Moriya in the Diet. A number of scandals based on collusive ties between Defense Ministry officials and contractors have been reported, such as the bid-rigging case involving the Defense Facilities Administration Agency in 2006. In the upcoming summons, the improper relationship between Yamada Yoko and Moriya will also be focused on. In current questioning, Moriya has admitted that he was treated to free golf and to wining and dining by a former executive of the company for many years, although he was aware that such practices violate the Self-Defense Forces' code of ethics,. Yamada Yoko received orders worth approximately 14.3 billion yen from the Defense Ministry during Moriya's four-year term of office as vice minister. It has also been revealed that Moriya had earnestly recommended a company established by the former executive in a tender to procure engines for CX transport aircraft. Focusing on this fact, the opposition camp suspects that Moriya might have received kickbacks. Regarding the problem of uncovered data error, Moriya was in the position of being deeply involved in Maritime Self-Defense Force's (MSDF) refueling operation as Defense Bureau director general at that time. 10) Prosecutors trying to clear up location of missing 30 million yen taken by former executive director from Yamada Yoko Corp. in order to create close ties with Defense Agency around 1989 ASAHI (Page 39) (Excerpts) October 25, 2007 Around 1989, the then executive director of Yamada Yoko Corp., a Tokyo-based trading firm specializing in military sales, withdrew 30 million yen from his company as a temporary advance, but later, according to an informed source, the whereabouts of the money became unknown. Over ten years later, the temporary advance remained TOKYO 00004976 007 OF 010 outstanding, the result of sloppy management, and the executive repaid the money when he retired last year. The money withdrawn by the former executive director was around the time when business activities toward the then Defense Agency started in earnest. The special investigation unit of the Tokyo District Prosecutors Office, in order to completely clear up Yamada Yoko's capital situation, is starting to question former employees and others about what happened to the money. Although the money was returned by the retiring executive director, where it was used remains unknown. 11) US Defense Department appoints first assistant secretary for Asia; High priority on Asia clear NIKKEI (Page 2) (Full) October 25, 2007 Hiroshi Maruya, Washington The White House announced on Oct. 23 that the Department of Defense has appointed Deputy Undersecretary of Defense James Shinn as the nation's first Assistant Secretary for the Asia-Pacific Region, a post established by President George W. Bush. The post of Assistant Secretary for Asia was established in October 2006 by the Defense SIPDIS Department as part of its reorganization effort. The position is responsible for the region from East Asia, including Japan, to Central Asia, including Afghanistan. The appointment clearly reflects the US military's stance of attaching importance to Asia. The Pentagon's Asia-oriented policy is also reflected in Secretary of Defense Robert Gates' planned visit to Japan on Nov. 7-9. During his stay in Japan, Gates is expected to hold talks with Prime Minister Yasuo Fukuda and Defense Minister Shigeru Ishiba. 12) Chief cabinet secretary and state minister for Okinawa affairs agree to restart talks on Futenma relocation next month YOMIURI (Page 4) (Excerpt) October 25, 2007 Chief Cabinet Secretary Machimura and State Minister for Okinawa Kishida met on the 24th in the Prime Minister's Official Residence (Kantei) and agreed to start coordination to restart, prior to Prime Minister Fukuda's visit the United States in mid-November, talks with Okinawa Prefecture officials on the issue of relocating the US Marines' Futenma Air Station in Okinawa. Their thinking is to convene the talks in mid-November of the Futenma Relocation Council, which consists of representatives of the relevant ministries of the central government, Okinawa Prefecture, and four local governments. 13) Members of families of abductees to meet prime minister tomorrow to ask for hard-line stance toward DPRK SANKEI (Page 3) (Full) October 25, 2007 Members of the Association of the Families of Victims Kidnapped by North Korea (AFVKNK) will meet Prime Minister Yasuo Fukuda tomorrow at the Prime Minister's Official Residence (Kantei). This will be their first meeting since the inauguration of his administration. During the meeting they will ask the prime minister to deal with North Korea with a hard-line approach, inheriting former Prime Minister SHINZO Abe's policy, and settle the abduction issue by TOKYO 00004976 008 OF 010 rescuing the abductees as soon as possible. The prime minister during the LDP presidential election campaign noted, "I want to settle the abduction issue myself." He also noted in his recent policy speech, "I will do my utmost to normalize ties between Japan and North Korea, by settling unfortunate past accounts through the realization of the return of all abduction victims as soon as possible." On the other hand, he is reportedly searching for a dialogue policy toward that nation. The AFVKNK and the National Association for the Rescue of Japanese Kidnapped by North Korea had sought a meeting with the prime minister to ask him to have the cabinet impose additional sanctions, arguing that in late October sanctions against North Korea are showing signs of producing effects. Prior to the meeting with the prime minister, members of the AFVKNK on Oct. 5, following the inauguration of the Fukuda cabinet, visited the Kantei and met Chief Cabinet Secretary Nobutaka Machimura. Machimura told them, "We would like to produce results with the determination that we want to settle the issue along with you as soon as possible. On that occasion, Shigeo Iizuka (69),brother of Yaeko Taguchi (22 at the time of the abduction) and the deputy representative of the AFVKNK, said, "I want to directly meet the prime minister to confirm his determination to settle the abduction issue." 14) "Japan offers new proposal on northern territorial issue," says Russian newspaper but Japan denies report YOMIURI (Page 2) (Full) October 25, 2007 Kenichi Ogata, Moscow The Russian newspaper Kommersant reported on Oct. 24 that Japan had informally sounded out Russia to conclude a peace treaty on the condition that the two countries would continue negotiations on the ownership of Kunashiri and Etorofu islands -- two of the four disputed Russia-held islands off Hokkaido. According to the article written by the Tokyo bureau chief of the ITAR-TASS, Japan's new proposal went: the two countries should conclude a peace treaty; Russia would return the Shikotan Island and Habomai islets -- the two of the four disputed islands -- to Japan; and a peace treaty would stipulate that the attribution of Kunashiri and Etorofu islands is in dispute. The proposal also says that in order to conclude a peace treaty, Russia needs to agree to continue talks on the ownership of Kunashiri and Etorofu islands. The ITAR-TASS article reported that Japan had not offered the proposal formally but it did so to feel the Russian side's opinion. A Japanese Foreign Ministry official, however, yesterday rejected the report, saying, "We haven't offered any proposal as was reported." 15) Takeo Hiranuma implies possibility of forming new party with eye on new Lower House election SANKEI (Page 5) (Excerpts) October 25, 2007 TOKYO 00004976 009 OF 010 House of Representatives member Takeo Hiranuma, a former international trade minister who has remained an independent since he left the ruling Liberal Democratic Party in opposition to the government's postal-privatization plan, delivered a speech in a Tokyo hotel yesterday. In his speech, Hiranuma stressed his view that he would not rejoin the LDP for the time being. He stated: "I would like to fight the next Lower House election as a conservative independent. My mission as a senior politician is to build a ship on which members of the Democratic Party of Japan (DPJ or Minshuto) who hope for healthy conservatism can easily board." Hiranuma indicated in his remarks that he would form a "Hiranuma Party" on the occasion of the next Lower House election. He said: "Since I became an independent, I have realized that there are many talented junior lawmakers in the DPJ. In order to put an end to the divided Diet, it is necessary to win DPJ lawmakers to my side. I predicted that the DPJ would split in the July Upper House election, but the party won big. So I was unable to take action. " 16) Former Health Minister Kan and incumbent Masuzoe clash over issue of drug-induced illnesses in Lower House TOKYO SHIMBUN (Page 2) (Slightly abridged) October 25, 2007 The Democratic Party of Japan is intensifying its attack on the government over the problem of drug-induced hepatitis patients. In a House of Representatives Health, Labor and Welfare Committee meeting yesterday, DPJ Deputy President Naoto Kan, who had addressed the HIV-tainted-blood scandal when he was health and labor minister, took the floor as a questioner. On the hepatitis problem, the ministry has found recently documents listing the names of patients who contracted hepatitis C after being administered a tainted blood product. Kan said: "The ministry has customarily concealed unfavorable documents." He further demanded that the government should promise the state and pharmaceutical firm in question that it will provide the patients with treatment costs. Comparing the stance he took as health minister and that of Health, Labor and Welfare Minister Yoichi Masuzoe, Kan demanded that Masuzoe should take a more confrontational approach to the bureaucracy. He then said: "You look like a bureaucrat." Masuzoe refuted him: "I have not been controlled by bureaucrats." But he added: "As someone who was once health minister, I would like you to advise me on any deficiencies," calling for a "joint struggle" with Kan in resolving the problem. The DPJ has placed importance on the drug-induced hepatitis problem in the same way as its approach to the government's antiterrorism special measures bill in the current Diet session. The main opposition party intends to grill the government with such arguments as: "Both the Health, Labor and Welfare Ministry and the Defense Ministry have taken the same method of concealing information," as said by a senior House of Councillors member. 17) Blackstone, largest US investment fund, to branch out to Japan TOKYO 00004976 010 OF 010 shortly SANKEI (Page 1) (Excerpts) October 25, 2007 It was learned yesterday that the Blackstone Group of the US, the largest investment fund in the world, will make inroads into Japan for the first time. It will shortly set up Blackstone Group Japan in the AIG Building in Marunouchi, Tokyo. The decision will be formally announced in November. The group is known for the fact that the Chinese government invests in it. The company is listed on the New York Stock Exchange. Its advance into Japan will enable it to carry out triangular mergers, under which it can acquire Japanese companies using its own stocks as merger consideration. The advance of the largest investment fund that can manage huge amounts of funds will likely further activate M&As on the Japanese market. Blackstone Group has decided to advance into Japan on a full scale by establishing a Japan corporation, because it has judged that amid the unabated commotion on the global financial market stemming from the sub-prime loan fiasco, revitalization of businesses by Japanese companies that have many healthy assets, and large-scale corporate reorganization, such as M&As, in industrial circles have yet to move into full swing. It appears to intend to expand its income and earnings, by developing investment targets and giving advice to funds it manages. For a start, it will likely invest in real estate, such as hotels, and then launch a drive to acquire Japanese companies. SCHIEFFER