JAPANESE MORNING PRESS HIGHLIGHTS 07/24/08

UNCLAS SECTION 01 OF 10 TOKYO 002036

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 07/24/08

Index:

Defense and security affairs:
1) Former LDP Secretary General Hidenao Nakagawa speaking at
sea-power symposium proposes a "rebuilding" of the U.S.-Japan
alliance to allow leadership (Yomiuri)
2) Suspicions that a Japanese or foreign submarine rammed a Japanese
fishing boat off Chiba: U.S. denies any connection with incident
(Tokyo Shimbun)

Informal Six-Party Talks:
3) Secretary Rice, in a meeting with Foreign Minister Koumura in
Singapore promotes regional security body; Komura wants
denuclearization first (Mainichi)
4) Japanese, North Korean foreign ministers meet in Singapore, with
Koumura making pitch for resolution of abduction issue (Nikkei)
5) U.S. pressed by others in informal six-party talks to postpone
the removal of the DPRK from the terror list, as Japan reiterates
its concerns and doubts (Yomiuri)
6) Japan alarmed by mood of progress toward North Korea
denuclearization at the informal six-party talks in Singapore
(Tokyo Shimbun)

7) Government to expand number of refugees to be accepted in Japan
(Asahi)

8) WTO negotiations might be extended in order to give more time for
finding a breakthrough on key issues (Yomiuri)

Political agenda:
9) Calls for Diet dissolution either late this year or early next
year coming from the ruling camp (Nikkei)
10) LDP election tsar Koga sees coalition winning 180-200 single
seats in the next Lower House election (Sankei)

11) Fiscal 2009 tax reform: Ruling parties to postpone hike on
consumption tax in order to avoid voter backlash in the next Lower
House election (Tokyo Shimbun)

Articles:

1) Nakagawa proposes rebuilding Japan-U.S. alliance at maritime
symposium

YOMIURI (Page 2) (Full)
July 24, 2008

The second Japan-U.S. Sea Power Dialogue, a symposium to explore
Japan-U.S. cooperation in the development of marine resources and
maritime security, was held at a Tokyo hotel on July 22-23 under the
auspices of the Ship & Ocean Foundation, Center for New American
Security, and Yomiuri Shimbun. In a meeting after the symposium on
July 23, former LDP Secretary General Hidenao Nakagawa asserted that
the two countries should display strong leadership in resolving
maritime issues.

Touching on dropping fish catches and submerging islands due to
rising sea levels, Nakagawa said: "Oceans have serious issues that
threaten the very existence of mankind. Japan and the United States
must demonstrate leadership. Close cooperation in science and
technology and the environment in addition to security would help
rebuild the Japan-U.S. alliance on the maritime front. China has

TOKYO 00002036 002 OF 010


begun paying attention to the sea. It is important to engage that
country in the maritime order we envision."

2) Japan's waters crowded with subs

TOKYO SHIMBUN (Page 24) (Full)
July 24, 2008

Late last month, a Japanese fishing boat capsized and sank off Chiba
Prefecture's Cape Inubo. In this incident, the Suwa Maru No. 58, a
round haul netter, is rumored to have collided with a submarine. The
truth is still unknown. The question, however, is how many
submarines and which country's submarines are in the sea around
Japan. The Tokyo Shimbun interviewed experts.

Shunji Taoka, a journalist on military affairs, suspects that the
Suwa Maru No. 58 might have collided with a submarine. Taoka pointed
out this possibility shortly after the incident.

"The waves and winds were normal at that time. One of the Suwa Maru
No. 58's crewmen said he felt two shocks to the starboard within
several seconds and then leaned to the right. Judging from this
account, it's unlikely that the Suwa Maru No. 58 sank in the
chopping waves. When we think of this incident in a process of
elimination, the most conceivable cause is (colliding with) a
submarine."

According to Taoka, the U.S. Navy deploys 27 nuclear-powered
submarines in the Pacific Ocean, Russia stages 23 submarines (10
immobile),China has 62 submarines (including 34 old subs),South
Korea has 10, and Japan's Maritime Self-Defense Force has 18. "A
ship at sea cannot see a submarine," Taoka said. "So," he added,
"the submarine must go around them."

A nuclear-powered submarine normally navigates at a depth of about
100 meters but sometimes surfaces to a periscope depth of about 20
meters for radio communication or other reasons. Then, that
submarine uses its sonar to check its environs for engine sounds,
propeller cavitation, or other situational changes. However, a
submarine cannot detect a ship that has stopped its engine like the
Suwa Maru No. 58. In this case, the submarine's periscope, for
instance, could hit that ship, according to Taoka.

"It's not so unusual for submarines to collide with other ships,"
Taoka said, adding: "There were at least five accidents involving
Japanese ships, and there were such accidents in South Korea as
well."

Kazuhisa Ogawa, an analyst on military affairs, is cautious about
determining what caused the accident. "I didn't see the Suwa Maru
No. 58's damage, so I don't know if the Suwa Maru No. 58 collided
with a submarine," Ogawa said.

Ogawa added: "Some suspect the Suwa Maru No. 58 might have collided
with a submarine. If that is the case, I would say the countries
that can operate in the waters where the accident took place are
Japan, the United States, China, and Russia."

The MSDF, however, ruled out the possibility of one of its own
submarines being involved in the accident. "There's no report of a
collision from the submarines that returned to port on or after June
23 (when the Suwa Maru No. 58 sank off Cape Inubo)," the MSDF staff

TOKYO 00002036 003 OF 010


office's public relations division told the Tokyo Shimbun.

Meanwhile, U.S. Naval Forces Japan headquarters gave a similar
answer, with its public affairs division stating that no U.S.
military submarines were involved in the accident.

Then, the remaining countries are Russia and China. However, Ogawa
notes that Russia is not conducting such naval activities at
present.

Ogawa is negative about the possibility of China's involvement,
saying: "In November 2004, a PLA submarine entered Japan's
territorial waters near the Sakishima Islands in Okinawa Prefecture.
After that, China's military forces on the front were told not to
conduct activities that can be taken as reckless. Moreover, the
Beijing Olympics is near at hand. I wonder if they would try to do
anything that can be called into question."

Another journalist on military affairs also said: "In the Cold War
days, Russia was squaring off with the United States in the sea
around Japan. After that, however, the operation rate of their
submarines went down. In recent years, it has recovered with
economic stability. Even so, I can't think that is likely. China has
a large number of submarines and is now going to have a blue-water
navy. However, China is focusing on the vicinity of Hainan Island
and the Taiwan Strait."

North Korea's submarines are now very old. It is therefore
unrealistic for them to operate in the Pacific Ocean. South Korean
and Taiwanese submarines also have little reason for coming all the
way to Japanese waters, according to the journalist.

At any rate, it is a surprising fact that there are so many
submarines around Japan.

3) U.S. proposes developing six-party talks into regional security
mechanism; Japan disapproves of idea, saying denuclearization should
come first

MAINICHI (Page 2) (Full)
July 24, 2008

Foreign Minister Masahiko Koumura held a meeting with U.S. Secretary
of State Condoleezza Rice in Singapore on July 23. Based on progress
on North Korea's denuclearization issue, Rice announced a plan to
develop the six-party talks into a Northeast Asia security body over
the long run, saying, "I would like to discuss the principles of a
Northeast Asia peace and security mechanism." Koumura balked at the
idea of advancing discussions at a time when the verification of the
North's nuclear declaration remains incomplete, saying, "Exchanging
views is good, but it is extremely important to monitor progress on
the denuclearization process."

Rice's statement that effectively presented the post-six party talks
vision before North Korea completely abandons its nuclear programs
is likely to have an impact on the future course of the six-party
talks as well. Koumura, on the other hand, effectively made Japan's
stance clear that unless the North's denuclearization becomes
certain, the six-party talks must not move on to the next stage,
including a regional security mechanism.

Koumura, explaining that the North's promised reinvestigation into

TOKYO 00002036 004 OF 010


the abduction issue has yet to take shape, asked Secretary Rice to
urge North Korea to make progress in its relations with Japan. In
response, Rice simply said: "I will convey the message clearly to
North Korea."

4) Brief contact made between Japanese, North Korean foreign
ministers; No progress made on abduction issue; Koumura calls for
settlement

NIKKEI (Page 2) (Abridged slightly)
July 24, 2008

Singapore

Foreign Minister Masahiko Koumura, meeting briefly with his North
Korean counterpart Pak Ui Chun after an informal six-party foreign
ministerial on July 23, urged the North to bring progress to the
issue of Japanese nationals abducted by North Korea in the past.
Nevertheless, with the United States scheduled to officially delist
North Korea as a state sponsor of terrorism on August 11, there are
no prospects for the resumption of Japan-DPRK talks to break the
deadlock regarding the abduction issue.

After the foreign ministerial, Koumura said to Pak, who was sitting
next to him: "We would like to move Japan-DPRK relations forward by
resolving outstanding issues." In response, Pak simply said: "I
see." The conversation ended there without escalating into a
penetrating discussion, as was expected by Japan.

In the six-party foreign ministerial, Koumura explained that a
reinvestigation into the abduction issue, which was promised by the
North in working-level talks in June, has not begun, saying: "We are
at the stage of promise for promise. We would like to move on to the
stage of action for action early."

U.S. Secretary of State Condoleezza Rice said: "Abduction is a
dreadful act. North Korea must clear up the truth through an
investigation and take action for the settlement of the issue."
Russian Foreign Minister Lavrov, too, indicted the need to settle
this humanitarian issue.

Pyongyang seems to have concluded that exhibiting a confrontational
stand toward Japan is inadvisable until the United States takes
North Korea off its list of terrorism-sponsoring nations.

Nevertheless, China and South Korea have openly expressing
dissatisfaction with Japan's policy of not joining energy aid to the
North unless there is progress on the abduction issue. The six-party
foreign ministerial took place in defiance of Japan's opposition to
it. Japan finds itself in a difficult position.

5) Informal Six-Party Talks: U.S. being pressed to reconsider
decision to remove North Korea from terrorist-sponsor list; Foreign
Minister Koumura makes appeal, but Japan continues to be in
difficult position

YOMIURI (Page 3) (Excerpts)
July 24, 2008

An informal meeting of the Six-Party Talks was held in Singapore
yesterday, but with the start of verification of North Korea's
nuclear declaration having slipped due to North Korea not taking a

TOKYO 00002036 005 OF 010


concrete stance on beginning that process soon, there is growing
possibility that doubt will spread about whether the Bush
administration will be able to remove as planned North Korea's name
from the list of states sponsoring terrorism. However, if delisting
is put off, the talks themselves could stall over North Korea's
sharp reaction, so the U.S. seems to be facing an agonizing choice.
(Singapore dispatch)

"Well, these are informal talks anyway," said Foreign Minister
Koumura as he headed toward the hotel where the talks were being
held, stressing a business-as-usual feeling about them. The Japanese
government is alarmed that the foreign ministers meeting would be
overvalued.

The specific method of verifying North Korea's nuclear declaration
has yet to be set, and the way leading to the North's abandoning its
nuclear programs remains unclear. At this stage, though, with the
holding of the foreign ministers' meeting, the impression being
given to the world is that there is progress being made on the North
Korea nuclear problem. There is fear that even without any
substantive progress, negotiations on such issues as energy
assistance will continue at North Korea's pace. In fact, the
Japanese government from the start was reluctant to hold the
informal talks. There also was concern that the understanding of the
participants toward Japan's abduction issue would decline.

The government therefore designated the foreign ministerial as a
forum for once more making the appeal to the other countries about
the pending issues of nuclear weapons and the abductions, with one
senior Foreign Ministry official characterizing it as, "a place to
transmit a political message." Foreign Minister Koumura repeatedly
stressed two points as crucial: 1) verification of North Korea's
nuclear declaration; and 2) resolving pending issues between Japan
and the DPRK, including the abduction cases.

The Foreign Minister in referring to Japan-DPRK relations stressed:
"We would like to quickly move from the pledge-for-pledge state
(based on words) to the action-for-action stage. He appealed to
North Korea to implement its pledges, such as the reinvestigation of
the abduction issue that has yet to be carried out. With his series
of statements, Foreign Minister Koumura aimed at raising alarm bells
toward the mood of conciliation toward North Korea in the
international community.

6) Six-party talks: Japan alarmed about "progress-has-been-achieved"
atmosphere generating; Gap in views of abduction issue highlighted

TOKYO SHIMBUN (Page 2) (Full)
July 24, 2008

Foreign Minister Koumura at an informal meeting of foreign ministers
of members of the six-party talks on North Korea's nuclear issue,
held on July 23, called for an early verification of that nation's
nuclear report. Japan is alarmed that a growing mood of seeing
progress on the nuclear issue is spreading, even though specific
steps for verification have yet to be set and there is no prospect
for North Korea to fulfill its pledge to reinvestigate abduction
cases involving Japanese nationals.

Perception gap over abduction issue highlighted

Emerging from the foreign ministerial, Koumura told reporters, "It

TOKYO 00002036 006 OF 010


is necessary to move Japan-North Korea relations, including the
abduction issue, forward. The process still remains on the
pledge-for-pledge phase. We must move it to an action-for-action
stage."

The Japanese government's basic policy is to achieve progress on
Japan-North Korea relations, including the abduction issue, as well
as on the nuclear arms program issue. The first foreign ministerial
has taken place to discuss the nuclear issue. However, North Korea
has made no response to Japan's call for reinvestigation into
abduction cases.

Among Japanese government officials, there had been views skeptical
about the meaning of holding the foreign ministerial from the
beginning, as one senior Foreign Ministry official noted that since
a meeting of top envoys to the six-party talks, which serves as a
venue for prior coordination, was not held, the foreign ministerial
meeting this time is an extra event, where nothing specific would be
decided.

Japan has been worried that by holding a foreign ministerial before
specific verification procedures have been set, the result would be
taken by North Korea as progress on the nuclear issue. If a mood of
seeing progress on the nuclear issue spreads widely, other countries
could point an accusing finger at Japan for its rejection of
extending energy aid to North Korea on the grounds that the
abduction issue has yet to be settled.

According to Koumura, some foreign ministers at the ministerial
called for progress on Japan-North Korea relations, with U.S.
Secretary of State Rice stating that the U.S. strongly supports
Japan on the abduction issue.

However, Rice during a Japan-U.S. foreign ministerial meeting held
prior to the six nations' foreign ministerial asked Koumura, who had
just asked for U.S. mediation, "Does nothing ever occur between
Japan and North Korea?" Though Rice has pledged U.S. cooperation,
her question gave the impression that a gap in interests over the
abduction issue is gradually widening even between Japan and the
U.S.

7) Government to expand acceptance of refugees

ASAHI (Page 1) (Slightly abridged)
July 24, 2008

The government has decided to introduce a "third-country settlement
system" to accept on a constant basis refugees living in camps in
neighboring countries after fleeing overseas from conflict in their
own countries. The government will come up with concrete measures,
including the number of refugees it will accept, before the end of
the year, after relevant ministries and agencies work out the
arrangements. If all goes smoothly, Japan will accept about 30
refugees in fiscal 2010. As the first test case in Asia, the new
development will likely mark a tuning point for Japan's refugee
policy, which has been called "closed" by domestic and international
audiences "closed."

Although Japan in 1981 joined the United Nations Convention relating
to the Status of Refugees, it has annually accepted only several to
several dozen refugees. The United States and European countries,
which host large population of refugees, have criticized Japan for

TOKYO 00002036 007 OF 010


not accepting more refugees, while just providing money. In 2007, 14
countries, including the United States and European nations, which
have introduced the third-country settlement system, accepted about
75,000 refugees from Burma (Myanmar),Iraq and other countries.

With an eye on the introduction of a third-country settlement
system, senior officials from 11 ministries and agencies, including
the Justice Ministry, Ministry of Foreign Affairs, and Cabinet
Secretariat, will hold a meeting on July 29 to arrange to submit the
plan to a cabinet meeting later this year. Several ministries are
expected to include expenditures in their budgetary requests for
fiscal 2009. They also will work out specifics such as standards for
accepting refugees, the number of refugees to be accepted, and
training facilities. Reportedly, the possibility is high that Japan
will first accept Burmese refugees who are now living in Thailand.

8) WTO talks likely to be extended: Breakthrough to be explored at
meeting of small number of countries

YOMIURI (Page 9) (Full)
July 24, 2008

An informal cabinet-level meeting of the multilateral trade
liberalization talks (Doha Round) sponsored by the WTO yesterday
held a second day of discussions. Many developing countries
expressed dissatisfaction with the U.S. plan to cut subsidies for
domestic agriculture. The reaction among industrialized countries to
a delay in talks on mined and manufactured products is becoming
stronger. As such, the talks, which are scheduled to end on July 26,
will most likely be extended.

The U.S. prior to a plenary meeting indicated a compromise plan to
cut domestic agricultural subsidies to reduce the upper limit of
subsidies to 15 billion dollars a year (approximately 1.6 trillion
yen). However, Brazilian Foreign Relations Minister Amorim on the
evening of July 22 sought a further cut, noting, "The U.S. has
thrown the ball, but the ball has not gone far enough."

In the meantime, industrialized countries blamed developing
countries over the mined and manufactured products area. Trade chief
Mandelson of the European Union (EU),which is ready to make
concessions on cuts in tariffs on farm products, criticized
developing countries, saying, "It is clear that cutting tariffs on
mined and manufactured products is way behind. If a consensus is to
be reached, it is necessary to strike a balance between agriculture
and the mining and manufacturing industries."

In an effort to find a breakthrough in the deadlocked situation, a
meeting of cabinet ministers from seven major countries, including
Japan, the U.S., the EU, India and Brazil, was held on the afternoon
of July 23. Agriculture Minister Wakabayashi prior to the meeting
said, "My responsibility is heavy." Economy, Trade and Industry
Minister Amari noted, "What each country wants to protect is subtly
different. However, it is important to ultimately bring back
something positive."

Japan's original plan was to have more than 10 PERCENT of all farm
products (about 1,300) approved as key items, including rice, sugar,
and butter, for which high tariffs can be imposed as exceptions.
Wakabayashi made a concession on this in Geneva, saying, "I want to
secure at least 8 PERCENT ." However, the dominant view at a meeting
on July 22 was that discussions will go nowhere unless the number

TOKYO 00002036 008 OF 010


proposed by the chairman -- between 4 PERCENT and 6 PERCENT -- is
adopted. Views calling for the adoption of a tariff cap limiting
tariffs on farm products to a designated level are also persistent.
Chances are that Japan might be urged to make more concessions at
the meeting of cabinet ministers.

9) LDP's Koga, Suga and New Komeito share view that Lower House
should be dissolved at year's end or beginning of next year

NIKKEI (Page 2) (Slightly abridged)
July 24, 2008

A series of statements came out of the ruling Liberal Democratic
Party (LDP) yesterday on the possibility of dissolution of the House
of Representatives at the end of the year or beginning of next
year.

Election Strategy Council Chairman Makoto Koga in a speech yesterday
in Tokyo stated:

"Our party's life is at stake depending on how we deal with the tax
system debate and the budget compilation later this year. I can't
think of anything but the beginning of next year as the timing for
Lower House dissolution and a snap election."

Election Strategy Council Deputy Chairman Yoshihide Suga said in
speech in Fukuoka: "The timing should be the end of this year or the
beginning of next year."

Koga revealed his view that the next extraordinary Diet session
should be convened in September as usual. He stated:

"There are gaps on views on the law on refueling in the Indian Ocean
in the ruling coalition and the public opinion is divided. In a bid
to pass a law extension bill through the Diet, we should be cautious
about making a decision on the convocation of the extra session.

Secretary General Bunmei Ibuki, however, has called for convening
the extra session in late August.

Koga and Suga share the same view on the timing of Lower House
dissolution and convocation of extra session with the New Komeito,
the LDP's junior coalition partner.

LDP lawmakers will likely pay attention to the remarks by Koga, one
of the four LDP executives, and Suga.

A senior New Komeito member pointed out yesterday:

"Last year, the Maritime Self-Defense Force personnel returned to
Japan for three months (when the old Antiterrorism Special Measures
Law expired). There will be no problem to extend the refueling law
in the next regular Diet session."

The same New Komeito member took a cautious stance toward convening
the extra Diet session in late August.

10) LDP's Koga: 180-200 seats to be secured in electoral districts
in next Lower House election

SANKEI (Page 5) (Full)
July 24, 2008

TOKYO 00002036 009 OF 010



Liberal Democratic Party (LDP) Election Strategy Council Chairman
Makoto Koga in a speech yesterday in Tokyo revealed his view that
the next extraordinary Diet session should be convened in September.
He stated:

"There are differences in the ruling coalition on enacting an
amended Antiterrorism Special Measures Law, and public opinion also
is divided. In order to enact a bill by a two-thirds lower chamber
overriding vote, we should carefully set the Diet schedule."

Referring to the timing of Lower House dissolution, Koba
underscored:

"Our party's life is at stake depending on how we deal with the tax
system debate and the budget compilation later this year. After
finishing up those tasks, we should then decide on the timing of
Lower House dissolution. It is impossible to dissolve the Diet
before the end of the year."

Koga also commented on the next Lower House election: "Unless the
ruling coalition secures 180 to 200 seats in the electoral district
races, it will be difficult for us to hold a majority in the Lower
House."

Regarding the possibility of a cabinet shuffle, Koga said: "It might
be a good chance to build a new base for the country. The Prime
Minister is the person to make the decision on that."

Meanwhile, Election Strategy Council Deputy Chairman Yoshihide Suga
said in a speech yesterday in the city of Fukuoka:

"(The Lower House should be dissolved) either at the end of the year
or early next year. The Lower House should not be dissolved from the
end of June through July next year (since the Tokyo Metropolitan
assembly election is scheduled then)."

Suga, commenting of the eight electoral districts in which the LDP
has yet to field its candidates, said: "We will be able to decide
that by the end of August."

11) Tax code revision for fiscal 2009: Ruling camp decides to put
off consumption tax hike to stave off impact on next Lower House
election

TOKYO SHIMBUN (Page 1) (Full)
July 24, 2008

The ruling camp on July 23 decided to put off a hike in the
consumption tax in revising the tax code for fiscal 2009. The
decision is based on the dominant view that a consumption tax hike
at a time when there is only about a year to go until the term of
office of members of the Lower House expires would affect the next
Lower House election.

A senior official of the Tax System Research Commission of the
Liberal Democratic Party (LDP) on the 23rd pointed out, "Considering
the impact of a consumption tax hike on the economy, the current
situation does not permit such a hike." This official indicated his
view that a three-year road map for a consumption tax hike should be
mapped out to seek understanding from the public.


TOKYO 00002036 010 OF 010


Yuji Tsushima of the LDP Tax System Research Commission at a
subcommittee meeting of the panel on July 23 noted, "Even though a
proposed tax hike is good in theory, it could not be implemented
smoothly unless the public accepts it." He indicated that it would
be difficult to raise the consumption tax at the present stage.

Policy Research Council Chairman Sadakazu Tanigaki, who had made a
positive statement for a consumption tax hike, in a speech given in
Kitakyushu City on July 18 said that it would be difficult to raise
the consumption tax before the Lower House election. He said, "Since
the Democratic Party of Japan (DPJ or Minshuto) is bound to oppose
our bill raising the consumption tax, it could not be enacted. No
measures can be taken on the consumption tax hike issue before the
Lower House election."

The consumption tax issue has been the major focal point in the
fiscal 2009 tax code revision. However, Prime Minister Fukuda on
June 23 had hinted at a possibility of putting off the plan, saying,
"I will consider about it from an overall perspective. However, it
will be something to be handled in the future."

ZUMWALT