DAILY SUMMARY OF JAPANESE PRESS 11/27/07

UNCLAS SECTION 01 OF 11 TOKYO 005345 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: DAILY SUMMARY OF JAPANESE PRESS 11/27/07 Index: (1) LDP Secretary General Ibuki: DPJ investigation likely mistaken about Nukaga attending party (2) Fukuda explicitly says that Finance Minister Nukaga will stay on in office (3) Iwakuni wavering over its rejection to USFJ realignment 4 (4) US military firms in Japan, too (5) Yamada Corp. asked defense lobby for favors over discontinued contract (6) LDP's coordination of candidates for new Lower House election: North wind blowing against "Koizumi's children" (7) Prime minister puts on hold test-drilling of gas-fields in East China Sea, out of consideration to China (8) Matsushita to mass-produce consumer fuel cells next fiscal year as CO2 emission-cut measure (9) TOP HEADLINES (10) EDITORIALS ARTICLES: (1) LDP Secretary General Ibuki: DPJ investigation likely mistaken about Nukaga attending party YOMIURI ONLINE (Full) November 27, 2007 The Liberal Democratic Party (LDP) this afternoon released the results of its own investigation of the allegation in testimony by former Vice Defense Minister Moriya that Finance Minister Nukaga attended a dinner party hosted by the former executive director of Yamada Corp., a trading firm specializing in aircraft and defense procurement. The statement concluded: "There is a high probability that the Democratic Party of Japan's (DPJ) investigation was mistaken." Prior to the release, LDP Secretary General Ibuki at a press conference this morning revealed the outline of the investigation. Regarding the evening of Dec. 4, 2006, which the DPJ indicated to be the date of the party, he explained that the party's investigation had found out: 1) Nukaga had a dinner meeting at a hotel that evening and took a group photograph with the date and time inserted on it; and 2) there was a recorded tape of the security-related study group meeting he attended after the dinner. Ibuki added: "No matter how you consider it, it is our sentiment that there would not have been any free time for Mr. Nukaga to have attended the meeting at the Japanese restaurant Hamadaya (as the DPJ asserted)." He took the view that most likely the DPJ was mistaken in its investigation. In addition, regarding the DPJ and other opposition parties' request that Nukaga be summoned as a sworn witness before the House of Councillors' Fiscal and Financial Affairs Committee, Ibuki stated: "Since the name of the person who presented (the DPJ) with the TOKYO 00005345 002 OF 011 information that (Mr. Nukaga) was present at the dinner party that day is unclear, it would lead to invalid questions being asked (in the committee hearing)." He asked the DPJ to disclose proof that Nukaga was indeed at the dinner party. (2) Fukuda explicitly says that Finance Minister Nukaga will stay on in office SANKEI (Page 3) (Abridged slightly) November 27, 2007 LDP fights back, saying that Nukaga has "alibi" Allegations have surfaced that Finance Minister Fukushiro Nukaga had attended a dinner party along with former Administrative Vice-Defense Minister Takemasa Moriya and others. Prime Minister Yasuo Fukuda indicated in yesterday's House of Councillors plenary session that his presence at the dinner did not pose any problem, saying, "He has politely explained the matter at press conferences and committee meetings," adding, "I want Mr. Nukaga to continue making utmost efforts to compile the fiscal 2008 budget." Nukaga, too, dismissed the suspicion at the plenary session, saying: "Although I have exchanged words with corporate executives at a New Year's party held by Keidanren (Japan Federation of Economic Organizations) and other occasions during my tenure as Defense Agency chief, I have never given anyone a special favor." Chief Cabinet Secretary Nobutaka Machimura also told a press conference yesterday afternoon: "I believe Mr. Nukaga has explained matters correctly based on facts. Are there any concrete grounds for the allegations?" Meanwhile, opposition party Diet affairs chiefs met yesterday in the Diet building and decided to demand that Nukaga and Moriya testify under oath before the Upper House Financial Affairs Committee. At a meeting of directors of the Upper House Financial Affairs Committee that followed, the opposition camp sought testimonies by Nukaga and others, but the ruling block rejected it. The two camps are now scheduled to discuss the matter on Nov. 27. LDP leadership thinks groundless accusation will turn into another "e-mail fiasco" Following Prime Minister Fukuda's clear indication to retain Nukaga, the Liberal Democratic Party has staged a fight-back. The LDP leadership has reportedly obtained hard evidence to prove that Nukaga was not present at the dinner. A senior LDP member wishfully said: "This is going to be another fake email fiasco involving former Democratic Party of Japan lawmaker Hisayasu Nagata, who lost his Diet seat because of it." Contrary to such a comment, LDP lawmakers seem highly irritated by the Nukaga problem. Unable to dispel suspicions, Nukaga now finds himself in a storm of criticism from within the party. LDP Secretary General Bunmei Ibuki received on Nov. 25 a telephone call from Nukaga from the city of Akita. Visibly frustrated, Ibuki told the finance minister: "If you have hard evidence, you should say so at places like a press conference. You should consult with Diet Affairs Committee Chairman (Tadamori) Oshima." TOKYO 00005345 003 OF 011 Allegations have emerged that Nukaga was present, along with Moriya and Motonobu Miyazaki, a former managing director of defense equipment trading house Yamada Corp., at a dinner party held on December 4, 2006, at the Hamadaya Japanese restaurant in Tokyo's Ningyocho district in honor of former US Department of Defense Japan Division Director James Auer. The DPJ grilled Nukaga by even producing the dinner seating arrangement. Nukaga has repeatedly brushed aside the allegations by simply saying: "There is no evidence (that I attended the dinner party). I have no recollection of it, either." Unable to remain silent observers, Ibuki and others seem to have concluded that the matter could no longer be left to Nukaga alone. The Nukaga issue cropped up in a government and ruling coalition liaison meeting held yesterday noon, with prime ministerial aides also calling for speedy measures. Nukaga reportedly presented the LDP leadership with evidence proving that he was attending a different study meeting that day. Following this, LDP Senior Deputy Secretary General Hiroyuki Hosoda told a press conference yesterday: "(The DPJ) must restore Mr. Nukaga's honor by correcting false information and statements that went too far." Ibuki, too, applied pressure on the opposition camp, saying, "Persons who posed the wrong questions must be summoned to testify at the Diet." Nukaga quit as Defense Agency chief in 1998 to take responsibility for a scandal involving breach of trust cases against the agency and as state minister in charge of economic and fiscal affairs in 2001 in the wake of allegations regarding his receipt of money from mutual aid foundation KSD. Aware of such background of Nukaga, some in the ruling camp are voicing concern if he can get through deliberations on the fiscal 2008 budget as finance minister. DPJ eyes Nukaga's sworn testimony to settle the matter In the face of the LDP's enhanced efforts to turn around the situation, the DPJ has not given the slightest indication of relaxing its pursuit of the Nukaga case. In yesterday's meeting of the Diet affairs chiefs of four opposition parties, the DPJ proposed sworn testimonies by Nukaga and Moriya before the Upper House Financial Affairs Committee. DPJ President Ichiro Ozawa yesterday took this view in the city of Nagasaki: "(Mr. Nukaga) is in a position to formulate the budget as finance minister. If he has nothing to hide, he should say so fairly and squarely." Deputy President Naoto Kan, too, cynically said in the city of Maebashi: "We would like to see Mr. Nukaga dispel suspicions through his Diet testimony. We will be happy to provide him with a chance to do so." The DPJ, however, has yet to produce any conclusive evidence that Nukaga attended the dinner party on December 4, 2006. Former DPJ Lower House member Hisayasu Nagata last spring brought up a bogus email at the Diet based on uncertain information which eventually cost him and Seiji Maehara a Diet seat and DPJ presidency, respectively. In yesterday's meeting of Diet affairs chiefs of the opposition parties, there was a scene where members of other parties asked the TOKYO 00005345 004 OF 011 DPJ representatives to make sure that the allegations are true. In response to the observation in the ruling bloc that the Nukaga case would escalate into another e-mail fiasco, DPJ Diet Affairs Committee Chairman Kenji Yamaoka defiantly said to reporters yesterday: "They lack awareness. We are asking for 'yes' or 'no' to our proposal for Diet testimony (by Nukaga). The nature is totally different." (3) Iwakuni wavering over its rejection to USFJ realignment ASAHI (Page 37) (Abridged) November 23, 2007 In the process of realigning US forces in Japan to mitigate Okinawa's burden of hosting US military bases, the government is urging base-hosting municipalities in the nation to accept more burdens with carrots and sticks. However, local base hosts are wavering over such a way of doing things. The city of Iwakuni in Yamaguchi Prefecture is opposed to the planned transfer of carrier-borne aircraft to Iwakuni base. Iwakuni is now constructing a new municipal government office building. Meanwhile, the government has stopped its subsidy for the city's new office building project. Consequently, the city's municipal administration is in turmoil. The government decided yesterday on incentives as carrots for localities accepting realignment plans. The city hall of Iwakuni is located in the downtown area. Right next to it, the city's new office building, which is covered with blue sheets, is under construction. The new office building is expected to be completed at the end of the current fiscal year. However, the city has yet to make up for the government's discontinued subsidy of 3.5 billion yen for the current fiscal year. "We have cooperated with the base. However, the government has been too hard on us. We don't know why. The government is pushing for realignment with carrots and sticks. We can't agree to such a way of doing things." So saying, Iwakuni Mayor Katsusuke Ihara displayed bitterness in a press conference on Nov. 16. Earlier in that day, the city's municipal assembly met for an ad hoc session to take a fourth vote on the municipal government's budget plan to raise funds with special bonds for the city as a newly consolidated local public entity of municipalities, instead of counting on subsidies from the state coffers. The budget plan, however, was voted down. Iwakuni City's municipal assembly is dominated by those in favor of accepting carrier-borne aircraft to the base for the government's subsidy. In the city's assembly, pro- and anti-realignment members are squaring off. Mayor Ihara attended an office meeting on Nov. 20. On that occasion, he implied the possibility of resigning for a mayoral election. The turmoil was triggered by the government's interim report on the US military's realignment in Japan that came out in October 2005. The report announced a government plan to move 59 carrier-borne fighter jets from the US Navy's Atsugi Naval Air Station in Kanagawa Prefecture to the US Marine Corps' Iwakuni Air Station. After realignment, Iwakuni base will deploy a total of 120 warplanes, double its current deployment, and the base will be one of the largest US airbases in the Far East, as well as the US Air Force's Kadena base in Okinawa Prefecture. TOKYO 00005345 005 OF 011 In March 2006, Mayor Ihara polled Iwakuni's residents on the government's plan to relocate carrier-borne fighters to Iwakuni. In that poll, nearly 90 PERCENT of those who voted were against the government-proposed realignment plan. In response to this outcome, the mayor has carried through his stance against the transfer plan. Mayor Ihara was a Labor Ministry bureaucrat. In 1999, Ihara was elected to Iwakuni's mayorship before the city's consolidation with neighboring municipalities. Mayor Ihara has accepted the base's presence itself. In 2002, he accepted the transfer of eight heavy-lift helicopters from Hawaii. However, he is now in a position to say: "The relocation of carrier-borne aircraft to Iwakuni is on a large scale. It will impose a heavy burden on local residents, so it's unbearable." The work of constructing Iwakuni's new office building was started in September 2005 before the government's interim report was out. The cost of construction is 8.1 billion yen. The government decided to subsidize the construction project with a total of 4.9 billion yen. This subsidization was based on a Japan-US Special Action Committee (SACO) agreement of 1996. In 1997, Mayor Ihara's predecessor accepted the redeployment of aerial refueling aircraft from Futenma airfield in Okinawa to Iwakuni. The government then decided to subsidize Iwakuni in return for its consent to the transfer of tanker aircraft to Iwakuni. The city was subsidized with 1.4 billion yen in fiscal 2005 and 2006. In May 2006, however, Japan and the United States finalized their talks over their plans to realign the US military presence in Japan, incorporating an agreement on tanker aircraft relocation. The government then called off its subsidization that was based on the SACO accord. Meanwhile, Iwakuni was still opposed to the transfer of air tankers to Iwakuni. In December 2006, the government notified Iwakuni of its decision to call off its remaining subsidy of 3.5 billion yen for the final fiscal year. (4) US military firms in Japan, too AKAHATA (Page 1) (Full) November 22, 2007 A US private-sector military firm has a contract to provide security for the US forces' missile-defense radar site at the Air Self-Defense Force's Shariki Base in the city of Tsugaru, Aomori Prefecture, sources revealed yesterday. In Iraq, US military companies carry out various security-related services for US military personnel stationed there. However, they also have caused serious problems in Iraq, such as killing or injuring civilians. The presence of US military firms in Japan is also being called into question. Chenega Blackwater Solutions is the US private-sector contractor that provides armed security guards to protect the US military radar site that houses the so-called "X-band radar." According to Tsugaru City officials who were briefed by the government, Chenega assigns about 60 personnel to the Shariki base. In June last year, X-band radar, a missile defense radar system designed to detect incoming ballistic missiles, was introduced to the Shariki base under an intergovernmental agreement reached between Japan and the United States connected to the realignment of US forces in Japan. According to the Oct. 7 issue of the Stars & TOKYO 00005345 006 OF 011 Stripes, a US military newspaper, the X-band radar is operated by a detachment of about 100 personnel from the 94th Army Air and Missile Defense Command. The detachment has only two US military personnel. All the rest are from two US military contractors, Chenega Blackwater Solutions and Raytheon. Raytheon is a military company that develops and manufactures weapons like missile defense systems, and about 40 personnel from this company are operating the X-band radar. In Iraq, Blackwater USA, a US private security company contracted by the US Department of State to guard the US Embassy and provide other security services, shot 17 local civilians to death in September. The Iraqi government suspended this US military company's business license, and the US Congress held a public hearing. Private military firms are now under fire. Tsugaru City's municipal government explains that the Chenega SIPDIS personnel are "civilian employees." Japan has no primary jurisdiction over them even if they cause incidents or accidents on duty. That is because they are under the Japan-US Status of Forces Agreement, which grants privileges to members of the US Forces Japan. (5) Yamada Corp. asked defense lobby for favors over discontinued contract ASAHI (Page 39) (Abridged) November 27, 2007 Yamada Corporation, a defense-related trading company based in Tokyo, asked the Japan-U.S. Center for Peace and Cultural Exchange, an incorporated body with influential defense-related lawmakers on its board of directors, around the summer of 2006 for favors over the discontinuation of a subcontract on processing the Imperial Japanese Army's poison gas. Naoki Akiyama, a permanent director of the center, is said to be a channel between Japanese and US war industries and political circles. Nichibei Bunka Shinkokai (Japan-U.S. Cultural Promotion Society),the center's predecessor, was also a contractor on the same undertaking. However, this contract is also being called into question. The Japan-U.S. Center for Peace and Cultural Exchange has former Defense Minister Fumio Kyuma and others on its board of directors. In the past, there were also Finance Minister Fukushiro Nukaga and Defense Minister Shigeru Ishiba. Meanwhile, the Tokyo District Public Prosecutors Office's task force has now arrested Notonobu Miyazaki, 69, a former managing director of Yamada Corp., for embezzlement and on some other charges. Miyazaki was also a director of the center until last year. In connection with Miyazaki's allegations, the task force searched the center's office and is now analyzing those seized from there. According to Defense Ministry and other sources, a seabed probe was conducted at the port of Kanda in the town of Kanda, Fukuoka Prefecture, for sea-route extension. At that time, the Imperial Japanese Army's gas shells were discovered there and those had to be removed for disposal. The first undertaking (in FY2004) and the second one (in FY2005) were entrusted to the then Defense Agency. The third undertaking in FY2006 and following projects were handed over to the Ministry of Land, Infrastructure and Transport. At present, the fourth project is going on. More than 1,200 shells were TOKYO 00005345 007 OF 011 removed for disposal by FY2006. In November 2003, the then Defense Agency held open competitive bidding to start the projects. Yamada Corp., as an agent arranging for American divers for salvaging gas shells, became a subcontractor under a major steelmaker that became a contractor. However, the Defense Agency decided to contract a domestic diving company during the second project. Yamada Corp.'s subcontractor was discontinued. Yamada Corp., according to its sources, planned to take part in another project of that steelmaker to make up for its discontinued subcontract. Yamada Corp. then asked the center to recommend it to that maker. (6) LDP's coordination of candidates for new Lower House election: North wind blowing against "Koizumi's children" MAINICHI (Page 5) (Slightly abridged) November 27, 2007 With an eye on a possible dissolution of the House of Representatives, the ruling Liberal Democratic Party (LDP) is now hurrying to coordinate its candidates for the next Lower House election. As Election Committee Chairman Makoto Koga and Vice Chairman Yoshihide Suga have set standards for selecting "winning candidates" and not giving special treatment to the so-called "Koizumi children," freshmen lawmakers who won their seats in the 2005 Lower House election, the impact will adversely affect them. It is uncertain that those lawmakers, who were elected to the Lower House because their names were placed higher on the party's proportional representation list, will be given high rankings on the list for the next Lower House election. It is also difficult for those Koizumi children who won Lower House seats after being defeated in electoral district races to obtain official endorsements to run in constituencies in which the former postal rebels (now reinstated in the LDP) will run. One such lawmaker complained: "Are we now disposable candidates?" Former LDP Secretary General Tsutomu Takebe, regarded as a chief backer of the Koizumi children, said the following in a party hosted by lawmaker Kuniko Inoguchi on Nov. 20: "The LDP should set a slate for women also in the next Lower House election so that it will be easy for the party to gain voter understanding. In particular, former State Minister (in charge of declining birthrate) Inoguchi is one of those who were asked by the party leadership to run in the previous election." He played up the need for treating Koizumi children favorably by putting their names on the party's proportional representation list. Of the freshman lawmakers who ran only in the proportional representation segment in 2005, 14 were elected, and of those lawmakers, those who were given preferential treatment include: Inoguchi, whose name was put at top on the party's list of the proportional Tokyo bloc; Tadayoshi Nagashima, at the top on the North Shinetsu bloc list; and Mitsue Kondo, at the top of the Kinki bloc list. Suga noted on Nov. 25: "It is a big mistake if the Koizumi children have been campaigning, thinking that they will be given favorable treatment this time around as well." He took a negative stance toward giving them preferential treatment in the proportional representation segment. But it will be difficult for those freshman lawmakers whose names are placed lower on the list than in the TOKYO 00005345 008 OF 011 previous election to hold on to their seats in the next election, even if they are allowed to run in the proportional representation segment alone. Senior Election Committee members have urged them to run in single-seat constituencies. The likelihood is that Taizo Sugimura, who was 35th on the South Kanto bloc list in the 2005 election, will run in the Hokkaido No. 1 district; and Keisuke Suzuki, 34th in the South Kanto, will run in the Kanagawa No. 7 district. Taku Otsuka, who was 29th on the proportional Tokyo bloc, is eager to run in the Tokyo No. 5 district. However, since the LDP won big in the previous Lower House election, there remain only 15 single-seat districts in which there is still no LDP candidate. The LDP is having difficulties in coordinating candidates in four single-seat constituencies where "assassin" candidates who won Diet seats in the proportional representation segment after being defeated in district races, are pitted against postal rebels who rejoined the LDP after winning single-seat district races. The LDP's Gifu City chapter held a party on Nov. 23 in the Gifu No. 1 district, in which Seiko Noda, a postal rebel who returned to the LDP, and Yukari Sato, will compete. Both Noda and Sato attended the party. Gifu City chapter chair Kazuhiro Tamaki sought to constrain the LDP headquarters' top-down decision, saying: "We cannot abandon one side (Sato) and help the other (Noda). If party headquarters urges (Sato to transfer to other district),it will be difficult for the LDP to secure a seat in the Gifu No. 1 district." However, coordination in the prefectural chapter seems to be difficult. Suga indicated that the results of a poll by the LDP would become standards for coordination of candidates. He stated: "Both think they are the best choice. We should show them objective figures." According to the LDP's survey so far, the number of districts in which lawmakers rejoined the LDP, who are more popular and have stronger organizational power than Koizumi children, is larger than that of districts in which the freshman lawmakers are superior to former postal rebels. The former postal rebels, who rejoined the LDP, have gained confidence that the party will back them. Should the LDP enter the election split into two groups, the main opposition Democratic Party of Japan (DPJ or Minshuto) would be able to fish in troubled waters. To avoid this situation, the LDP executive will likely be forced to walk a tightrope in carrying out coordination of the candidates. (7) Prime minister puts on hold test-drilling of gas-fields in East China Sea, out of consideration to China SANKEI (Top Play) (Full) November 23, 2007 The former ABE administration at one time decided to start negotiations to compensate fishermen for fishery losses, a precondition for starting test drilling to develop gas fields in the East China Sea. However, this policy decision was put on hold after the Fukuda cabinet was inaugurated. According to informed sources yesterday, the policy switch reflects the intention of the Prime Minister's Official Residence (Kantei). Japan and China have been at odds over where both sides should jointly develop and other details regarding gas field development. The ABE cabinet was determined to TOKYO 00005345 009 OF 011 launch compensation negotiations in case there was no progress in Japan-China talks by this fall. Relevant government agencies started preparations for compensation negotiations. The policy change, in a sense, underscores Prime Minister Yasuo Fukuda's priority to relations with China. In their meeting in April, former Prime Minister SHINZO ABE and Chinese Premier Wen Jiabao agreed to come up with some specific measures by this fall to settle the ongoing dispute over joint gas-field development. However, a wide gap has been left unfilled between Japan, which insists that development should be near the Japan-China median line (an equa-distant line drawn between the shores of Japan and China, and China, which cites an area between the Japan-China median line and the Okinawa Trough (China-set boundary line). No progress has been made in bureau-director-level talks on gas-field development. The ABE cabinet had decided to launch compensation negotiations with parties that will be affected if test boring is carried out, such as fishermen in Nagasaki and Okinawa prefectures. The administration intended to demonstrate its strong determination by taking specific steps toward test drilling. The Fukuda cabinet, however, decided not to initiate negotiations for the time being, because it has to devote itself to domestic politics. The fate of such key bills as the new antiterrorism bill remain uncertain in the current political situation, in which the opposition bloc has control of the House of Councillors following the Liberal Democratic Party's crushing defeat in the July Upper House election. A government official was overheard saying: "The administration, which cannot afford to deal with diplomatic affairs, probably does not want to come up against China." China repeatedly said in the bureau-director-level talks that If Japan starts test boring, (the Chinese Navy) will dispatch a warship. Some observers see this threat behind the Fukuda cabinet's policy switch. It was found in May 2004 that China began constructing a mining facility called "Shirakaba or Chunxiao." Since then China constructed four test-drilling facilities near the median line. In reaction, then Minister of Economy, Trade and Industry Shoichi Nakagawa had granted concession rights to Teikoku Oil Co. in April ¶2005. Later, though, his successor Toshiaki Nikai called a halt to this move. (8) Matsushita to mass-produce consumer fuel cells next fiscal year as CO2 emission-cut measure NIKKEI (Top Play) (Full) November 27, 2007 Matsushita Electric Industrial Co. has decided to construct a plant in Shiga Prefecture to mass-produce fuel cells for household use. The company plans to begin operating the plant next fiscal year, with the aim of turning out 10,000 units a year by FY2010. Ebara Corp. and Toshiba Corp. are also planning to mass-produce fuel cells. Fuel cells are a highly effective next-generation power source with low carbon dioxide (CO2) emissions. A certain level of performance is required for the products to become more widely used. Now that the latest versions are close to this level, the government TOKYO 00005345 010 OF 011 is looking into introducing a subsidy system. Given this, these companies have judged that putting the products on the market will become possible. The new technology that will contribute to significantly reducing CO2 emissions from households is likely to become widespread in the nation in a few years. Matsushita has been making fuel cells at a development facility in Moriguchi City, Osaka Prefecture, on a small scale. It now plans to build its first dedicated plant in Kusatsu City, Shiga Prefecture, at cost of 1-2 billion yen. This plant will initially produce 1,000 to 2,000 units a year and will gradually increase capacity. Models using gas will be marketed by Tokyo Gas Co. Ebara will expand its Fujisawa plant in Fujisawa, Kanagawa Prefecture, to start in FY2008 producing 1,500 units compatible with either gas or kerosene. The company plans to raise capacity to 10,000 units a year by FY2009. Toshiba Fuel Cell Power Systems Corp. based in Minato Ward, Tokyo, a subsidiary of Toshiba Corp., will finalize production plans within this fiscal year. Nippon Oil Corp. plans to buy up the fuel cell business of Sanyo Electric Co., as a step to start mass production. A life span of 40,000 hours (about 10 years of operation 10 hours a day) is considered a threshold for fuel cells to gain wide acceptance. Now that the latest versions are near this mark, these companies are preparing for mass production. The manufacturing cost is estimated at 4-5 million yen per unit, but the cost is expected to drop to about one million yen by 2010 owing to mass production, as well as shared specifications and parts. Manufacturers aim to lower the cost to 500,000 yen by 2015. The government has provided subsidies -- several million yen for each fuel cell installed at a house -- on a trial basis and has promoted verification tests. The government is also considering such incentive measures as offering subsidies or tax breaks for buyers in FY2009 and beyond. Makers expect such official subsidies will contribute to boosting sales. (9) TOP HEADLINES Asahi, Yomiuri: Former Vice Defense Minister Moriya to face criminal investigation probably this week Mainichi, Sankei: Prosecutors to question Moriya as early as this week Nikkei: Matsushita Electric to mass-produce fuel cells Tokyo Shimbun: Prosecutors eye indictment of Moriya on bribery charges Akahata: Government, ruling parties must heed the public's anger (10) EDITORIALS Asahi: (1) Gangland attacks must not be allowed (2) New Australian administration expected to break away from TOKYO 00005345 011 OF 011 US-centered foreign policy Mainichi: (1) Expansion of mail delivery business and social mission inseparable (2) New breeze from new Australian government Yomiuri: (1) ROK presidential poll closely associated with Japan's security (2) Close cooperation between agriculture, commerce and industry essential for revitalizing local economies Nikkei: (1) Split conservative force and South Korean presidential race (2) Can the life insurance industry restore public trust? Sankei: (1) Association of the Families of Victims of Kidnapped by North Korea has new leader (2) Strategic cooperation with new Australian administration vital Tokyo Shimbun: (1) Progress expected through Middle East Peace conference (2) Opening juvenile trials requires careful study Akahata: (1) Article 9 must be kept intact SCHIEFFER