JAPANESE MORNING PRESS HIGHLIGHTS 06/24/08

UNCLAS SECTION 01 OF 10 TOKYO 001726 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 06/24/08 Index: 1) Top headlines 2) Editorials 3) Prime Minister's daily schedule (Nikkei) North Korea problem: 4) DPRK nuclear declaration expected on June 26, after which U.S. will start delisting process (Yomiuri) 5) U.S. eager diplomatic results on North Korea's nuclear program and removing it from terror list while abandoning Japan's abduction issue (Yomiuri) Defense and security issues: 6) Prime Minister Fukuda at Okinawa memorial vows to put every effort into resolving base issues (Asahi) 7) House Speaker Yohei Kono at same Okinawa event touches on military's wartime responsibility there (Asahi) 8) No clue in sight in resolving stalemate over Futenma relocation as Fukuda visits Okinawa (Yomiuri) 9) Government panel sees need to revise constitutional interpretation regarding collective security for sake of missile defense (Yomiuri) 10) MSDF vessel dropping off quake-relief goods at China port gets cool welcome (Sankei) 11) Afghan reconstruction: G-8 foreign ministers meeting planning separate statement (Nikkei) 12) Government's Economic and Fiscal Policy Council watered down draft policy guidelines to avoid strains with LDP policymakers (Nikkei) 13) Prime Minister Fukuda in news conference kicks consumption tax hike issue down the road by saying that a decision will be made 2-3 years from now (Nikkei) 14) Government to remove Ikeo's name as Bank of Japan board nominee due to DPJ opposition (Yomiuri) Articles: 1) TOP HEADLINES Asahi, Mainichi, & Tokyo Shimbun: Fishing boat capsizes off coast of Chiba, 4 dead, 13 missing Yomiuri: U.S. to begin steps to take North Korea off list of terrorism sponsors, possibly on June 26 Nikkei: Fukuda: Consumption tax hike within 2 to 3 years Sankei: Russia already handed over Japanese fishing boat involved in shooting to government enterprise Akahata: Nagasaki District Court recognizes 20 people as radiation casualties TOKYO 00001726 002 OF 010 2) EDITORIALS Asahi: (1) Properly invest in land (2) Change of professional baseball commissioners Mainichi: (1) Stop heavy consumption of oil to cope with soaring prices (2) "Momiji sticker" for drivers aged 75 or older unfavorably received Yomiuri: (1) Economic and fiscal policy guidelines for 2008 must clarify financial resources for social insurance (2) Increase in oil output by Saudi Arabia expected to produce positive results Nikkei: (1) Oil producing countries, U.S., China must make more efforts to constrain oil demand (2) Full preparations needed for new strains of influenza Sankei: (1) Fukuda urged to discuss delisting issue with U.S. President (2) Strengthen cooperation with oil producing countries to deal with rising prices Tokyo Shimbun: (1) Oil consumer countries should also make efforts, without only relying on Saudi Arabia's measures (2) False labeling of low-level beef as Hida-brand beef stains brand name Akahata: (1) Golden opportunity to significantly raise lowest wages 3) Prime Minister's schedule, June 23, 2008 NIKKEI (Page 2) (Full) June 24, 2008 08:29 Left Haneda Airport on JAL flight no. 903 10:29 Arrived at Naha Airport. 11:23 Offered flowers on the Okinawa National Cemetery for War Dead in Peace Memorial Park in Itoman City. Then met with Election Committee Chairman Makoto Koga, chairman of the Japan War-Bereaved Association. Then attended memorial service for all the war dead in Okinawa. 13:59 Left Naha Airport on JAL flight no. 908. 16:12 Arrived at Haneda Airport. 16:40 Arrived at the official residence. TOKYO 00001726 003 OF 010 17:22 Met with Chief Cabinet Secretary Machimura at the Kantei. 18:01 Meeting of the Conference on Economic and Fiscal Policy. Then met with Welfare Minister Masuzoe, followed by Machimura and Deputy Chief Cabinet Secretary Futahashi. 19:49 Arrived at the official residence. 4) U.S. may begin delisting the North as state sponsor of terrorism as early as June 26, following Pyongyang's nuclear declaration YOMIURI (Top play) (Abridged slightly) June 24, 2008 White House spokesperson Dana Perino indicated in a press conference on June 23 that North Korea is expected to make a declaration of its nuclear programs to China, chair of the six-party talks on June 26. Indicating her willingness to comment on the next step upon receiving North's declaration, Perino pointed to the U.S. policy to begin procedures for delisting the North as a state sponsor of terrorism as early as June 26. Japan is opposed to the U.S. taking the North off its nuclear blacklist until there is progress on the abduction issue. Washington's step to delist the North is likely to have an impact on Japan-U.S. relations. Perino said: "The deadline is June 26. We expect the North will fulfill its obligation." She also said, "That will be followed by the principle of action for action follows," indicating that the United States would begin procedures for removing the North from the list of terrorist-sponsoring nations and put an end to the application of the Trading with the Enemy Act to North Korea. U.S. chief delegate to the six-party talks Christopher Hill categorically said on June 23: "Once a nuclear declaration is presented, the United States will fulfill its obligations (as agreed upon with North Korea) generally at the same time." Washington is required to notify Congress of its decision to delist the North as a state sponsor of terrorism 45 days before the step takes effect. Washington intends to closely verify what is in the North's declaration during that period, and if the declaration is found out to be insufficient, it might withdraw its decision to delist the North. Meanwhile, according to a six-party talks source, North Korea informed the relevant countries that it would demolish a cooling tower at the Yongbyon nuclear complex on June 27 as part of its effort to disable its nuclear facilities. The United States and North Korea are said to be in accord to blast the cooling tower within 24 hours of the North's presentation of a nuclear declaration and the start of procedures for delisting the North. The North was supposed to present a nuclear declaration by the end of 2007, but the country postponed it, citing a delay in the United States to delist it as a state sponsor of terrorism. 5) U.S. in hurry to achieve results on diplomatic front; North Korea to be delisted as state sponsor of terrorism regardless of abduction issue TOKYO 00001726 004 OF 010 YOMIURI (Page 2) (Abridges slightly) June 24, 2008 The U.S. administration of President George W. Bush has pressed North Korea hard for the presentation of a nuclear declaration by making it clear that it would delist it as a state sponsor of terrorism and stop applying the Trading with the Enemy Act to it. Behind this lies the President's desire to score high marks on the diplomatic front before leaving office next January. The U.S. Congress is scheduled to enter a recess on the 27th. Given the situation, in order for President Bush to notify it of his decision to delist the North in time, Pyongyang must present a nuclear declaration by June 26. The North's failure to meet the deadline would decisively stall the process of dismantling its nuclear program. According to a six-party source, the North will present a declaration to China, the chair of the six-party talks, early on June 26, and the United States will begin procedures for delisting the North and ceasing applying the Trading with the Enemy Act to it. The United States wants to revitalize the six-party talks by fulfilling its obligations based on the principle of action for action. Nevertheless, with a G8 foreign ministerial scheduled to take place in Kyoto on June 26, the timing is not good for Japan. In his talks on June 19 with U.S. Assistant Secretary of State Christopher Hill, Foreign Ministry Asian and Oceanian Affairs Bureau Director-General Akitaka Saiki urged the U.S. not to delist the North unless there is progress on the issue of Japanese nationals abducted by North Korea and other matters. Despite that, Washington has repeatedly indicated that the United States will deliver on its obligations once the North presents a declaration, effectively ignoring Japan's concern. Tokyo has persistently asked Washington to deal with the question of delisting the North cautiously. Regarding Washington's hasty step to delist the North at this point when the North's promise to reinvestigate the abduction issue remains unclear, a senior government official said before the dawn of June 24: "Is Washington going to take the North off the list of terrorism-sponsoring nations in defiance of Japan's wishes? It should wait until after closely verifying what is in the declaration." The North Korean issue will be on the agenda at the G-8 Lake Toya Summit, which is only two weeks away. At the summit, leaders of the relevant countries are likely to welcome progress on the six-party talks on dismantling Pyongyang's nuclear programs. The Japanese government will likely find it difficult to incorporate progress on the abduction issue in the envisaged G-8 declaration. U.S. Secretary of State Condoleezza Rice will also attend the G-8 foreign ministerial. Rice is scheduled to hold talks with Foreign Minister Masahiko Koumura on the 27th. The government intends to discuss closely future developments with the U.S. government. 6) Fukuda vows to do his best for base issues but remains unable to pave way for solution TOKYO 00001726 005 OF 010 ASAHI (Page 4) (Abridged) June 24, 2008 Prime Minister Fukuda yesterday made his first official visit to Okinawa Prefecture, where he attended a memorial service for the war dead in the Battle of Okinawa in World War II. The government has promoted Okinawa's industrial development while alleviating the island prefecture's base-hosting burden. Fukuda will follow this Okinawa policy and attach importance to dialogue with local leaders. However, he remains unable to pave the way to resolve pending issues, including Futenma airfield's relocation. In his speech at the memorial service, Fukuda portrayed Japan as a nation that cooperates for peace, declaring that Japan will fulfill its role in the international community. Referring to base issues, Fukuda stressed his stance of attaching importance to dialogue with local communities. "I will do my best to alleviate Okinawa Prefecture's burden while listening to the earnest voice of local communities," Fukuda said. Meanwhile, Okinawa has asked the government to move the construction site of Futenma airfield's alternative facility to an offshore area. In February, Chief Cabinet Secretary Machimura went further than ever in his press remarks. "We want to reach a settlement at an early date while bearing the option of offshore relocation in mind," he said. However, the United States is strongly opposed to revising the agreement reached between Japan and the United States on Futenma relocation to a coastal area of Camp Schwab in the island prefecture's northern coastal city of Nago. As it stands, Futenma relocation has been deadlocked. "To resolve the Futenma issue, the prime minister will need to display strong leadership that is convincing to both Okinawa and the United States," one government official noted. The Diet is currently divided, with the ruling coalition holding a majority of the seats in its lower house and the opposition camp controlling its upper house. Fukuda is therefore facing difficulties in steering his government. The question is whether he is strong enough to settle the base issues. 7) Kono refers to military responsibility ASAHI (Page 4) (Full) June 24, 2008 House of Representatives Speaker Yohei Kono delivered a speech in a memorial service held yesterday in Okinawa Prefecture for the war dead upon the 63rd anniversary of the end of the Battle of Okinawa in World War II. "The military in those days might not have given first consideration to the safety of local people in Okinawa," Kono stated. "And," he added, "we must not turn our eyes away from this doubt." This is the third time for Kono to deliver a speech there, following his previous speeches in 2005 and 2006. However, this is the first time for him to touch on the Imperial Japanese Army's responsibility. Kono noted, "Japan's leadership in those days was unable to bring the war to an appropriate and early end, and this resulted in a large number of victims in Okinawa." He also took up U.S. military base issues in Okinawa. "In the long-term," Kono said, "we should create a peaceful diplomatic environment in East Asia and we should TOKYO 00001726 006 OF 010 change the security situation so the current large-scale U.S. military presence will be unnecessary." With this, he emphasized that Japan should work to stabilize East Asia in order to realign and reduce U.S. military bases in Japan. 8) No clue in sight for Futenma relocation YOMIURI (Page 4) (Full) June 24, 2008 Prime Minister Fukuda made his first official visit to Okinawa Prefecture yesterday to attend a memorial service held in the island prefecture's city of Itoman for the war dead upon the 63rd anniversary of the end of the Battle of Okinawa in World War II. In the presence of reporters there, Fukuda voiced his willingness to push for the pending issue of relocating the U.S. Marine Corps' Futenma Air Station. In fact, however, there is no clue in sight to realize the plan. "Local sensitivity is very important. We'll have to resolve this issue early. We're now doing an (environmental impact) assessment. We will talk at length with Governor (Hirokazu) Nakaima and other people, for we must reach a convincing conclusion." Fukuda gave this comment after attending the memorial service to underscore his intention of reaching a settlement on the issue of Futenma relocation while attaching importance to local opinions. Meanwhile, Japan and the United States have reached an intergovernmental agreement on a plan to relocate Futenma airfield to a coastal area of Camp Schwab, a U.S. military installation in the prefecture's northern coastal city of Nago. The government plans to build a V-shaped pair of airstrips there as an alternative facility to take over the heliport functions of Futenma airfield. However, Okinawa Prefecture has asked the government to move the planned alternative's site to an offshore point. The government intends to comply with the request. However, the United States is strongly opposed to that change. As it stands, there has been no specific progress in consultations between the central and local governments. In April, the government held a meeting of its officials and local officials from Okinawa Prefecture and its four municipalities to consult on the issue of Futenma relocation. Since then, the government's consultative meeting with Okinawa has been suspended. In early June, the government held a meeting in Tokyo of officials from the Cabinet Secretariat, Cabinet Office, Defense Ministry, and Environment Ministry to discuss what to do about the legal interpretation of an environmental impact assessment if the plan is retouched. As seen from this move, the government is now preparing to revise the plan. Minister of State for Okinawa Affairs Kishida also visited Okinawa on June 21-23. Kishida met with the heads of municipalities in the prefecture's northern districts, including Nago Mayor Yoshikazu Shimabukuro. In that meeting, they agreed to resume a consultative meeting at an early date. However, the United States maintains its tough stance. Moreover, the ruling parties were defeated in the June 8 election for the prefecture's assembly, losing their majority. As a result, some officials deem it difficult to see progress in the situation for the time being. In the prefecture's assembly, the opposition parties are expected to occupy the posts of speaker and vice speaker and preside TOKYO 00001726 007 OF 010 over most key committees. "The governor would be stuck on the Futenma issue that rubs the opposition parties' nerves," a ruling party lawmaker elected from Okinawa Prefecture said. 9) Security panel to call for change in constitutional interpretation on missile defense YOMIURI (Page 2) (Full) June 24, 2008 The government's council on reconstruction of legal foundation for national security will present a package of proposals to Prime Minister Fukuda today. Under the current interpretation of the Constitution, the use of the right to collective defense is banned. The package calls on the government to change the interpretation to allow Self-Defense Force (SDF) troops to use the right of collective defense to enable them to (1) provide cover to U.S. Navy vessels under attack on international waters; and (2) intercept ballistic missiles heading toward the U.S. The panel also points out that there are problems with the government's current interpretation of the Constitution on the propriety of the SDF going to the aid of other militaries engaged in United Nations peacekeeping operations (PKO),etc., when they are attacked and on the propriety of the SDF providing rear-line support to its allies. The panel held its first meeting in May 2007 under the former Abe administration. But since Prime Minister Abe stepped down, the panel had suspended activities. 10) China coolly accepts MSDF vessel's first port call, probably reflecting anti-Japanese sentiment SANKEI (Page 2) (Full) June 24, 2008 (Zhanjiang, Guangdong Province, China) The Maritime Self-Defense Force (MSDF) escort ship Sazanami will visit a military port in China on June 24 on a military exchange mission. This will be the first visit to China by an MSDF vessel. The calling port is in Zhanjiang, where a fleet command center of the Chinese military is located. Although Japan-China relations are improving recently, some in China have protested the government's acceptance of an MSDF vessel. Given such public opinion, some of the planned exchange events will be canceled, and news-gathering activities by Japanese reporters will be limited. The visit to China by the Sazanami is in return for the first ever port call to Japan by the PLA Navy missile destroyer Zhanjiang last November. The Air Self-Defense Force planned to dispatch a relief team to China to rescue victims of the massive earthquake in Sichuan Province, but it forwent the dispatch. Instead, the Sazanami will transport 300 blankets and 2,600 canned food products. Not only anti-Japanese groups but even general people have reacted to the MSDF vessel's port call to China. On the Internet, views opposing the planned port call are appearing, with many asking whether a port call by an "aggressor country's vessel" is proper. TOKYO 00001726 008 OF 010 According to the China News Service, Rear Admiral Yang Yi sought understanding for the MSDF vessel's planned port call to China, but he also made the following remark, keeping in mind the voices of protest in the military: "China suffered severe damage in Japan's aggressive war. The port call by a vessel with the Japanese flag will easily remind us of our painful memory." Various events have been planned in commemoration of the port call, but a concert by an MSDF musical band has been canceled. In addition, the Japanese media will not be allowed to cover the exchange gathering and games on the deck between crewmembers of the Sazanami and the Zhanjiang. According to Japanese officials, permission from China is necessary for gathering news. An informed source analyzed that China's negative reaction to the MSDF vessel's port call might be reflecting public reaction to the recent agreement between the Japanese and Chinese governments on the joint development of gas fields in the East China Sea. 11) Afghanistan reconstruction; G-8 to set up coordination framework for assistance to border areas NIKKEI (Page 2) (Slightly abridged) June 24, 2008 The Group of Eight nations (G-8) have firmed up a policy of setting up a framework for the coordination of their aid policies with the aim of assisting areas bordering with Pakistan. The aim is to ensure effective assistance. They are expected to reach a consensus at a G-8 ministerial to be held in Kyoto on June 26-27 and then include the agreement in a special statement on Afghanistan. The border areas in Afghanistan have become a hotbed for terrorist activities. Among various antiterror measures, the international community is attaching importance to economic development and public security measures in the border areas. The number of aid projects has reached over 150. The total project size is estimated to be between 2-3 billion dollars. Under the envisaged framework, ambassador-level persons from various international aid organizations, including G-8 nations that are operating in Afghanistan and the UN, will meet and look into the possibility of extending cooperation, by checking progress on ongoing aid measures. As a framework tasked with checking reconstruction assistance to Afghanistan, there is also the bureau director-level Joint Coordination and Monitoring Board (JCMB) tasked with monitoring progress on assistance measures as a whole. Japan has provided assistance to Afghanistan totaling 65 million dollars for areas related to health, education, border control and assistance to refugees. At the G-8 foreign ministerial, Japan will lead discussions as the host nation to make the venue as a milestone for the realization of its being seen as a peace-cooperating nation, a concept that Prime Minister Fukuda advocates. 12) Basic policy guidelines forgo pending issues: CEFP takes moderate approach in drafting guidelines MAINICHI (Page 2) (Full) June 24, 2008 TOKYO 00001726 009 OF 010 The government's Council on Economic and Fiscal Policy (CEFP) on June 23 released the draft of basic policy guidelines for the 2008 national budget. The draft revealed that many pending issues, such as a consumption tax hike, the reallocation of road construction revenues, and the education budget, which could generate conflict within the Liberal Democratic Party (LDP),have been put on the back burner. The weakened basic policy guidelines reflect that the CEFP, which former Prime Minister Koizumi used as the driving force of the Kantei-led reform policy, has changed its nature. Explaining the moderate stance of the CEFP, a government source on June 23 noted: "The LDP fiercely opposed proposals made by the CEFP during the Koizumi administration. However, Prime Minister Koizumi forced his positions through." Advocating "structural reforms with no sacred areas," Koizumi appointed Heizo Takenaka from the private sector as state minister in charge of economic and fiscal policy. Basic policy guidelines issued during the Koizumi administration included proposals for the disposal of nonperforming loans within two to three years and a 3 PERCENT cut in public works. LDP lawmakers tied to special interests criticized Takenaka, with one saying, "We cannot possibly follow a group led by a layman." However, it was the usual practice that issues were in the end settled with Koizumi making a final decision. A compromising stance was visible in the fiscal 2006 basic policy guidelines, though, the last set issued by the Koizumi administration. The fiscal 2007 version of the guidelines did not include a numerical target for public works, with consideration given to the ruling parties, which were applying pressure for increased expenditures on the eve of the Upper House election. The basic policy guidelines for fiscal 2008 follow that same trend. Since the importance of basic policy guidelines in terms of setting a course for the next year's budget compilation has weakened, the prime minister's decision will be put to the test. 13) Prime Minister Fukuda: Consumption tax hike to be decided within 2 to 3 years NIKKEI (Top Play) (Excerpts) June 24, 2008 When asked by the press about his view on raising the consumption tax, Prime Minister Yasuo Fukuda said yesterday: "I want to consider it from a long-term perspective of two to three years. So it will be decided in the future." He indicated a cautious stance about raising the consumption tax rate in fiscal 2009. His remark yesterday slightly retreated from what he had said last week, namely, that now was a crucial time to make a decision. At the same time, he revealed that his government would come up in July with emergency countermeasures to tackle the social security problem, including an improvement in the medical service system. During an interview on June 17 with news agencies from the Group of Eight (G8) member countries, Fukuda stated on the possibility of a consumption tax hike: "Considering Japan is becoming an aging society, a path has narrowed." His remarks were taken that he would look into raising the consumption tax rate through debate on drastic reform of the tax system starting in the fall, with an eye on an increase in the government's share of the basic pension from fiscal TOKYO 00001726 010 OF 010 ¶2009. In his press conference yesterday at the Prime Minister's Office, Fukuda underscored: "The government has now been pushing with 'zero waste' approach to expenditure reform. There is also an issue of shifting tax revenues earmarked for road projects to the general account." He indicated in his remarks that he would give priority to gathering funds by slashing expenditures and integrating the special account from road-related taxes into the general account funds for the time being. He then said: "We also have to mull economic trends," indicating he would consider (a consumption tax hike) with the country's economic performance in mind. He also announced that in consideration of public criticism of the new health insurance system for those aged 75 and older, his government would come up with new measures, saying: "I will carry out a general review of administrative management from the public point of view." He then unveiled that a set of in 'five relief measures,' which the government would be make public before the end of July. The government, in order to restore public confidence in it, would compile measures for supporting the elderly people, improving the medical service system, supporting child-rearing, improving the system for irregular employees, and straightening out the pension-record mess. 14) Government gives up on nomination of Ikeo as BOJ Policy Board member YOMIURI (Page 2) (Full) June 24, 2008 The government yesterday gave up on its nomination of Keio University Prof. Kazuhito Ikeo for a Bank of Japan (BOJ) Policy Board post and decided to present another nomination to the next extraordinary Diet session. The reason is that Democratic Party of Japan (DPJ) Secretary General Yukio Hatoyama yesterday told Chief Cabinet Secretary Nobutaka Machimura by phone: "In consideration of relations with the People's New Party (PNP),we won't be able to approve the nomination of Ikeo in the extra Diet session, either." The DPJ had once decided to approve the government's nomination of Ikeo, submitted to the latest regular session. However, the party later refused to take a vote on the nomination, because the PNP threatened to leave the parliamentary coalition in the Upper House, reacting negatively to the nomination, arguing that it could not accept the DPJ's approval of Ikeo, who promoted postal privatization. As a result, the Upper House did not put it to a vote. The government also decided on a policy line of not resubmitting its nominations, disapproved by the DPJ in the regular Diet session, for members of an Oversight Commission on Reemployment, which would oversee the practice of amakudari, or placing retired senior bureaucrats into high-paying posts at private firms. The reason is that the DPJ has opposed the system itself. A government official said yesterday: "The prime minister will decide whether to approve reemployment (of retired bureaucrats)." SCHIEFFER