JAPANESE MORNING PRESS HIGHLIGHTS 11/27/07

UNCLAS SECTION 01 OF 08 TOKYO 005338 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 11/27/07 Index: 1) Prime Minister's daily schedule (Nikkei) Defense issues: 2) Former Vice Defense Minister Moriya to be questioned later this week by prosecutors on suspicion of receiving bribes (Asahi) 3) Defense Ministry budgets for GSDF's AH64D helicopter, which at 21.6 billion yen a unit will be twice the cost of the world's most expensive fighter, the F2 (Tokyo Shimbun) Politics in flux: 4) Opposition camp in Diet wants to summon former defense chief Nukaga as sworn witness, alleging he was wined and dined by shady defense contractor (Mainichi) 5) DPJ President Ozawa warns of possibility of Diet being dissolved early in 2008 (Asahi) 6) Prime Minister Fukuda, commenting on current political state, cites adage: One inch ahead is darkness (Asahi) 7) LDP tax council, wary of public opinion, postpones discussion of possible hike in consumption tax (Yomiuri) North Korea problem: 8) Two Japanese experts join the team inspecting North Korea's disabled nuclear facility (Yomiuri) 9) Government alarmed by discovery of Taiwan route for export of precision Japan machinery to North Korea (Yomiuri) 10) Environment Minister Kamoshita reveals new plan to help poor countries cut greenhouse gas emissions under post-Kyoto Protocol regime (Sankei) Articles: 1) Prime Minister's Official Residence (Kantei) Prime Minister's schedule, November 26 NIKKEI (Page 2) (Full) November 27, 2007 09:01 Attended a welcome party for Vietnamese President Nguyen Minh Triet and his wife at the Imperial Palace. 09:59 Met at the Kantei with Deputy Chief Cabinet Secretary Futahashi. Followed by Deputy Chief Cabinet Secretary Iwaki. 10:54 Met Economic and Fiscal Minister Ota. Later met Chairman Kosai of the government's Tax Commission. 13:14 Met Foreign Ministry's Asian and Oceanian Affairs Bureau Director General Sasae. Followed by Chief Cabinet Secretary Machimura. �00A; 14:01 Attended an Upper House plenary session. 16:11 Met at the Kantei with Futahashi and Assistant Deputy Chief Cabinet TOKYO 00005338 002 OF 008 Secretary Saka. SIPDIS 17:01 Attended a party executive meeting at the Kantei. 17:33 Attended a meeting of the Council on Economic and Fiscal Policy in the Diet building. 18:39 Arrived at his official residence. 19:09 Attended a banquet with his wife for President Nguyen Minh Triet at the Imperial Palace. 23:12 Returned to his private residence in Nozawa. 2) Tokyo District Prosecutors Office special investigation team to conduct criminal investigation into Moriya this week on suspicion of taking bribes ASAHI (Top play) (Abridged slightly) November 27, 2007 The special investigation squad of the Tokyo District Public Prosecutors Office has decided to conduct before the end of the week a criminal investigation into former Administrative Vice-Defense Minister Takemasa Moriya, 63, on suspicion of taking a bribe from Motonobu Miyazaki, 69, a former managing director of defense equipment trading house Yamada Corp. who is already under arrest on suspicion of corporate embezzlement and other charges, in the form of free rounds of golf worth 5 million yen in total over the last five years in anticipation of receiving favors in supplying defense equipment to the Defense Ministry. Former Yamada boardroom chief Tomonari Imaji, 57, under arrest for document forgery, who had accompanied Miyazaki in treating Moriya to free golf outings, has reportedly admitted that such entertainment was bribery. Yamada President Yoshihiko Yonezu testified at the Diet that Moriya had played golf more than 300 times at Miyazaki's expense in eight years until March 2006 and that the cost, including the fees for Miyazaki, came to over 15 million yen. Of them, the special investigation squad has intensively investigated the portion of the last five years that does not come under the statute of limitations. Moriya has allegedly been treated to free golf worth 5 million yen over the last five years. Miyazaki reportedly began treating Moriya to free golf 12 years ago when he was still Defense Policy Division director. Prosecutors looked into whether a long period of entertainment could be determined as bribery. As a result, they have concluded that Moriya was aware that extravagant golf tours to such regions as Hokkaido, Kyushu, Chugoku, and Hokuriku that cost Moriya several hundred thousand yen each time was bribery. In addition, Imaji, who had accompanied Moriya to a golf outing in April this year, has reportedly admitted to investigators that they had treated Moriya to free golf in the hope of receiving orders for defense equipment in return. TOKYO 00005338 003 OF 008 The special investigation squad seems to have concluded that free golf for Moriya was bribery by Miyazaki and others who had hoped that Moriya would in return give favors to Yamada and Nihon Mirise Corp., a defense equipment trading firm founded by Miyazaki in September 2006, in supplying defense equipment to the Defense Ministry. Prosecutors are expected to continue investigating the case to find out whether or not Miyazaki had given a large sum of money to Moriya. Moriya served as administrative vice-defense minister from August 2003 through August 2007 when he retired from the ministry. It has become clear that Moriya had repeatedly made comments defending Moriya's Nihon Mirise from this spring through June over the procurement of engines for the Air Self-Defense Force's CX next-generation transport aircraft. 3) GSDF chopper costs 21.6 billion yen, nearly double world's most expensive fighter jet TOKYO (Page 1) (Abridged) November 27, 2007 An attack helicopter, codenamed the AH-64D, is known for being priced high. Its per-unit cost is 21.6 billion yen. Such an expensive chopper is on the Defense Ministry's shopping list for the Ground Self-Defense Force. The AH-64D is earmarked in the Defense Ministry's budget estimate for next fiscal year. It is priced higher than the F-2 support fighter, which was said to be "the world's most expensive fighter plane" (approx. 12 billion yen per unit). Moreover, the Defense Ministry will give up procuring the AH-64D after fiscal 2009. The ministry will therefore have to select an alternative model only eight years after its start of AH-64D procurement. The AH-64D is the follow-on model to replace the GSDF's AH-1S helicopter. The AH-64D chopper, developed by Boeing Co., a US manufacturer of aircraft, is produced by Fuji Heavy Industries Ltd. (FHI) under license. The AH-64D was adopted by the US Army and used in the Gulf War. In addition, it was the world's strongest chopper loaded with all-weather scouting fire control radar. These factors led the Defense Ministry to select the AH-64D in 2001. The AH-1S's cost was about 3 billion yen. Meanwhile, the AH-64D's price was initially estimated at about 6 billion yen. Furthermore, the AH-64D now uses more domestically produced parts. Its unit cost has therefore skyrocketed in the past years. The AH-64D's unit cost is estimated at 8.3 billion yen in the Defense Ministry's budget request for next fiscal year. The Defense Ministry will now give up on its AH-64D procurement after its current midterm defense buildup plan for the period of five fiscal years from 2005 to 2009. The Defense Ministry estimates 40 billion yen for FHI's investments and will add this cost to the price of three AH-64D helicopters to be procured in fiscal 2008 and 2009. The AH-64D's per-unit additional cost is 13.3 billion yen, and its end-user price is as high as 21.6 billion yen. Procurement review needed The Defense Ministry initially planned to procure a total of 62 AH-64D helicopters. However, the Defense Ministry has now decided to TOKYO 00005338 004 OF 008 give up its AH-64D procurement after buying 13 units. This is deeply related to Japan's national security. The primary reason for the Defense Ministry's decision to give up on the AH-64D chopper is Boeing's announced plan to discontinue production. Even so, money can buy the follow-on model. However, the Defense Ministry deemed it difficult to spend further on the AH-64D. Aircraft procurement is almost always based on optimistic estimates. The AH-64D was first estimated at about 6 billion yen. However, its actual cost was close to that estimate only in 2002 when AH-64D procurement started. The AH-64D's price annually went up. In fiscal 2006, its unit cost reached 10.5 billion yen. In the case of the F-2 support fighter jet as well, its initially estimated cost was about 5.4 billion yen. However, its price went up to 12.2 billion yen. The defense industry pulls up the price with domestic production or licensed production, and the Defense Ministry continues to buy its products. There is such a pattern. There are also many golden parachutists in the defense industry. This is also a factor that causes doubts. "Domestic companies have technologies that can make weapons halfway," a staff officer of the Self-Defense Forces noted. "That's why," he went on, "the price goes up." He added, "There's no problem in a country that has no choice but to buy weapons from the United States because that country will buy them at the same time." 4) Opposition parties agree to demand Diet testimony by Nukaga, Moriya MAINICHI (Page 5) (Full) November 27, 2007 In connection with former Administrative Vice Defense Minister Takemasa Moriya's sworn testimony in the Diet that Finance Minister Fukushiro Nukaga was present at a dinner treated by Motonobu Miyazaki, a former executive of the defense equipment trading house Yamada Corp., who is under arrest, the main opposition Democratic Party (DPJ or Minshuto) and three other opposition parties agreed yesterday afternoon in a meeting of their Diet affairs committee chairmen to demand that Nukaga and Moriya be summoned to testify as witnesses before the House of Councillors Committee on Financial Affairs. Prime Minister Yasuo Fukuda, however, backed Nukaga yesterday in an Upper House plenary session, stating: "Mr. Nukaga has given his account at press conferences and Diet committee sessions. I want him to continue making efforts to compile the state budget for next fiscal year." With the prime minister's clear stance of supporting Nukaga, confrontation between the ruling and opposition camps is intensifying over the testimony issue. The DPJ has pursued Nukaga on the allegation that he was wined and dined by Miyazaki along with Moriya, specifying the date, time and place based on testimony the party obtained. Nukaga has, however, totally denied the allegation, saying on Nov. 23: "The Diet member should show us the seating list before questioning. His approach is beneath the dignity of the Diet." In an informal directors meeting of the Upper House Financial Affairs, the largest opposition party yesterday requested Nukaga and Moriya be summoned to testify before the committee, brandishing the threat of carrying out testimony by taking a vote in the committee. DPJ President Ichiro Ozawa asserted yesterday in Nagasaki City that the ruling camp should accept the opposition's demand, saying, "If (Nukaga) has nothing to hide, he should testify fairly and squarely." TOKYO 00005338 005 OF 008 However, the ruling coalition has gradually stepped up its stance of backing Nukaga. In a press conference yesterday, Chief Cabinet Secretary Nobutaka Machimura sought to constrain the DPJ, saying: SIPDIS "Mr. Nukaga has explained in an accurate fashion. I have a question whether it is appropriate to subject a cabinet minister to testify based on an allegation about which everybody knows there is no hard evidence." If the opposition's pursuit of Nukaga, who is finance minister, is prolonged, it will impact negatively on state budget compilation in late December. The opposition camp predicts that if the allegation is proved, Nukaga may have to step down. One ruling coalition member said, however, "If the DPJ delves deep into the matter, it will commit the same error as last year's e-mail fiasco." 5) DPJ President Ozawa: Lower House might be dissolved early in 2008 ASAHI (Page 4) (Excerpts) November 27, 2007 Democratic Party of Japan (DPJ) President Ichiro Ozawa told reporters yesterday in the city of Otsu: "In general, (dissolving the Lower House around the turn of the year) is not necessarily good for the government and ruling parties, but nobody knows what will happen at this time. It is fully possible that it will occur early in the coming year." He also stressed yesterday in a press conference in Nagasaki: "I want to field candidates across the nation by the end of the year at the latest so that we will be ready for an election if the Lower House is dissolved soon." In his meeting yesterday with senior Nagasaki Rengo (Japan Trade Unions Confederation) members, Ozawa said: "It will be a decisive battle. Now the DPJ can fight the election under the best conditions. I would like to file appropriate candidates." Behind Ozawa having mentioned his prediction of a Lower House dissolution is his attempt to dispel the notion that the time for a dissolution is slipping away. He reportedly intends to file some 220 candidates by today and the remaining 30 by the end of the year. Ozawa believes that the Fukuda administration has reached a dead end earlier than expected. Some DPJ members have predicted that there is a possibility that the prime minister will dissolve the Lower House before maneuvering over the state budget between the ruling and opposition parties begins next spring. 6) Prime Minister Fukuda: The future is unknowable ASAHI (Page 4) (Full) November 27, 2007 When asked by the press about his comment on Democratic Party of Japan (DPJ or Minshuto) President Ichiro Ozawa's remark that the Lower House might be dissolved early in the New Year, Prime Minister Yasuo Fukuda responded yesterday: "Politics has such an element. Nobody knows what will happen tomorrow. . . . It is not good to predict what will happen in the TOKYO 00005338 006 OF 008 future." 7) LDP tax panel to put off discussion on consumption tax YOMIURI (Page 1) (Full) November 27, 2007 The Liberal Democratic Party's Tax System Research Commission, chaired by Yuji Tsushima, launched full-fledged discussions on tax reform for FY2008 in its general meeting at party headquarters yesterday. The panel is expected to put off debate on bold reform plans, including a hike in the consumption tax, and to discuss only urgent priorities, such as measures to narrow regional disparities in terms of tax revenues. The key items to be discussed by the panel include future options for such additional taxes as the gasoline tax exclusively used for road construction after they expire next March. It also will discuss whether to scrap tax breaks for investors, which halve the tax rate on capital gains from 20 PERCENT to 10 PERCENT . This tax break is scheduled to expire in FY2007. The LDP panel aims to draw up its reform proposals in mid-December after consulting with the tax panel of the New Komeito, its coalition partner. On the consumption tax, the government's Tax Commission, an advisory panel to the prime minister, and the LDP's Fiscal Reform Study Group, chaired by Kaoru Yosano, proposed late this month that a consumption tax hike should be discussed on the condition of limiting the use of the additional income to spending on social security. However, under the current political situation, in which the House of Councillors is controlled by the Democratic Party of Japan, which insists that the current 5 PERCENT rate should be maintained, even if the coalition bloc submits related bills, there will be no prospects for them to clear the Diet. With an eye on the next House of Representatives election, many LDP members are also opposed to a policy that will lead to a heavier tax burden. Reflecting such calls, Prime Minister Fukuda had already revealed a decision to forgo raising the consumption tax in FY2008 before the LDP tax panel started discussion. 8) Six-party inspectors to begin inspecting disablement process at Yongbyon today YOMIURI (Page 2) (Abridged slightly) November 27, 2007 The Chinese Foreign Ministry announced yesterday that officials from Japan, the United States, China, and South Korea who are involved in the six-party talks on North Korea's nuclear programs will visit Yongbyon on Nov. 27-29 to check progress on the disabling of North Korea's nuclear reactors. Amid multilateral coordination for holding a meeting of the heads of the six delegations for December, they are expected to check whether there are any problems associated with disabling work. According to the six-party agreement reached in October, North Korea is required to disable the nuclear facilities at Yongbyon and declare all its nuclear programs before the end of the year. Two officials from Japan TOKYO 00005338 007 OF 008 The Foreign Ministry announced yesterday that it would send two ministry officials to Yongbyon for three days from Nov. 27 to confirm progress on the disablement of nuclear facilities there. This is the first time for the Japanese government to send personnel to Yongbyon to join the on-the-spot examination of the denuclearization of North Korea. The results will be reported to the Dec. 6-8 six-party meeting, now under coordination. Joining the on-the-spot inspection from Japan is Foreign Ministry Nonproliferation, Science and Nuclear Energy Division Director Tomiko Ichikawa and another official. The Japanese government takes a positive view about bearing the cost of denuclearization work, with a Foreign Ministry official saying, "We will consider it positively if there is a request." 9) Government alarmed at "Taiwan route" of exports to North Korea YOMIURI (Page 2) (Full) November 27, 2007 A trading firm in Taiwan has exported precision equipment capable of producing nuclear weapons-related materials to North Korea. The Japanese government is now alarmed, with a senior Defense Ministry official saying, "There is a possibility that Taiwan, which is not a member of the United Nations, has been a loophole in control of exports to North Korea." Taiwan is not constrained by a series of sanction resolutions adopted by the United Nations following the North's nuclear test last year. Taiwan also has advanced technologies with possible application to weapons of mass destruction, such as nuclear, biological and chemical weapons. The Japanese government is paying special attention to Taiwanese investigators' discovery of yet another illicit export to North Korea. A Foreign Ministry source said: "'The Taiwan route' will not directly pose a serious threat to stability in Northeast Asia." Nevertheless, the government is keenly interested in the specific timeframe the North imported the precision equipment from Taiwan. Pyongyang agreed this October to disable the nuclear facilities at Yongbyon before the end of the year. The Foreign Ministry source pointed out: "Although the North appears to be moving toward denuclearization, if the import from Taiwan occurred just recently, that doesn't match with what they are doing." Although the Japanese government does not have diplomatic relations with Taiwan, it intends to closely watch investigations by Taiwanese authorities in the coming weeks. 10) Environment minister to propose plan to help island states, poorest countries cut greenhouse gas emissions under post-Kyoto framework SANKEI (Page 1) (Full) November 27, 2007 In an interview with Sankei Shimbun yesterday, Environment Minister Ichiro Kamoshita spoke of the measures the Japanese government plans to take to contain global warming. In the 13th session of the Conference of the Parties to the UN Framework Convention on Climate TOKYO 00005338 008 OF 008 Change (COP13) in Indonesia on Dec. 3, in which a full-scale discussion will start on ways to cut greenhouse gas emissions after 2012, when the Kyoto Protocol expires. Kamoshita will announce Japan's plan to help island states and the poorest countries cut greenhouse gas emissions. Under the plan, Japan aims to discuss measures for such countries separately from those for developing countries in Africa and for emerging countries such as China and India. Kamoshita emphasized that priority should be given to building a consensus among all participants in COP13. He said: "It is important for all the members to reach an agreement in the process of making rules. We must avoid a situation in which some countries drop out of the new framework as a result of overly intense arguments." Japan will renew its call for a special working group joined by all the parties to be established under the COP to discuss a post-Kyoto framework. Japan will also propose assistance measures to enable economic growth in harmony with the environment for the poorest countries in Africa and other areas, as well as island states such as Tuvalu and the Republic of Kiribati, both of which may be threatened by any future sea level rise because of the low elevation. Kamoshita explained: "It is necessary for rising powers that are expected to emit more greenhouse gases, such as Brazil, Russia, India, China, and South Korea, to assume their due obligation." But he also said: "It may become difficult to build a consensus if overly tight restrictions are imposed on them," indicating a cautious view about imposing similar strict restrictions on such countries to those on industrialized countries. The European Union (EU) is expected to announce by 2020 a plan to cut greenhouse gas emissions by up to 30 PERCENT below 1990 levels. On this possibility, Kamoshita commented: "It will be undesirable if China, India and the United States refuse to join (the new framework)." He then indicated that Japan would stop short of mentioning any numerical targets, remarking: "We should not come up with numerical targets." SCHIEFFER