DAILY SUMMARY OF JAPANESE PRESS 05/13/09

UNCLAS SECTION 01 OF 10 TOKYO 001084 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 05/13/09 INDEX: (1) U.S Treasury Secretary Geithner travelling to China, puts off trip to Japan (Nikkei) (2) DPJ official's remark "If the DPJ takes over reins of government, Japan will not buy U.S. government bonds" sets off dollar selling on NY market (Jiji Press) (3) Japan, Russia concludes nuclear agreement; Cooperation on resources with Russia to be increased (Yomiuri) (4) Russia Premier Putin makes no promise regarding territorial dispute, puts "strategic relationship" first (Nikkei) (5) Japan-US integration to apply pressure on North Korea on normalization (Sankei) (6) The election and industrial groups: Anxiety about post-Ozawa DPJ, as new president may redraw strategy (Nikkei) (7) DPJ becomes refreshed by Ozawa's resignation!? Needs to present policies to counter ruling camp (Part 2) (Tokyo Shimbun) (8) 2nd MSDF dispatch eyed for July against pirates (Nikkei) 9 ARTICLES: (1) U.S Treasury Secretary Geithner travelling to China, puts off trip to Japan NIKKEI (Internet edition) (Full) May 13, 2009 Yusuke Yoneyama in Washington The U.S. Department of the Treasury on May 12 revealed that Secretary Geithner will travel to Beijing, China, and the end of this month for meetings with high-level Chinese officials on June 1-2. There will be a broad range of talks on important bilateral issues, including relations between the two countries being strengthened in order to sustain economic growth. With the exception of such specific purposes as attending international conferences in certain countries, this will be the first time for the Secretary to visit a country for bilateral talks. According to a Treasury Department source, the Secretary because of a scheduling difficulty will not be stopping in Japan, but he has expressed his strong desire to visit there in the near future. The Obama administration during the U.S.-China summit meeting in April agreed to expand the strategic economic dialogue with China begun under the Bush administration. The two themes of the dialogue are political-security and economic affairs. The first meeting is planned to be held in Washington this summer, with Secretary Geithner serving as the American representative for the economic area. (2) DPJ official's remark "If the DPJ takes over reins of government, Japan will not buy U.S. government bonds" sets off dollar selling on NY market TOKYO 00001084 002 OF 010 Jiji Com 9:17, May 13, 2009 New York, Jiji Press, May 12 BBC of Britain on May 12 reported that Lower House member Masaharu Nakagawa, "Next Cabinet" finance minister, said, "If the Democratic Party of Japan (DPJ) takes over the reins of government, Japan will not purchase U.S. bonds." This statement has set off dollar-selling against the yen on the New York Foreign Exchange Market. It is believed that the expression of concern about the safety of the dollar by a senior official of the DPJ, an opposition party that could take the reins of government in the next general election, has fueled anxieties about the dollar. (3) Japan, Russia concludes nuclear agreement; Cooperation on resources with Russia to be increased YOMIURI (Page 11) (Abridged slightly) May 13, 2009 Tsuyoshi Ito, Daisuke Segawa With the arrival in Japan of Prime Minister Vladimir Putin yesterday, great progress was made between Japan and Russia in such fields as resource and energy development, as seen in the signing of a bilateral nuclear agreement designed to promote the civilian use of nuclear power, such as nuclear power plants. Although Japanese companies pin great hopes on the promising Russian market, they also harbor strong distrust in Russia's policies, such as one giving preferential treatment to domestic companies. In order to deepen economic relations between the two countries, many challenges must be overcome. The Japan-Russia nuclear agreement is likely to offer many advantages to both countries. Japan is the third largest nuclear power-generating country following the United States and France. Japan also has excellent technology in manufacturing nuclear reactors and the like. Yet the country's self-sufficiency rate of enriched uranium that is used as fuel is less than 3%. This can explain why Japan has to rely heavily on imports from Europe. If Japan can import (enriched uranium) from Russia whose uranium enrichment capability reportedly accounts for 40% of the global total, it would help the country stably secure resources. Meanwhile, Russia, which plans to build 40 nuclear reactors over the next two decades, is counting on Japan's advanced technology. The agreement is likely to give a momentum to Japanese corporations as well. Toshiba Corp. reached an accord yesterday with Atomenergoprom, Russia's state-owned nuclear energy company, to develop uranium-enrichment plants. The conclusion of the nuclear agreement has now made it possible to pursue technological cooperation and joint ventures between the two countries. Putin addressed a Japan-Russia economic forum in Tokyo yesterday in which he urged Japanese firms to participate in the development of the Russian Far East, saying, "Japanese companies could take part in the project to develop pipelines from Sakhalin to Vladivostok." He also called for cooperation in such fields as energy, timber processing, and transport. TOKYO 00001084 003 OF 010 Japanese companies are highly alarmed at Russia's restriction on foreign investment. (In 2006),Shell and Japanese trading companies were forced by the Russian government to sell half their stakes plus one share in Sakhalin-2 to Gazprom, Russia's state-run natural-gas export company. Russia also raised tariffs on steel products and autos earlier this year as a support measure for the manufacturing industry. In his meeting with Putin yesterday, Aso expressed strong concern about Russia's protectionist moves, saying, "Russia has repeatedly raised tariffs." Putin rebutted Aso, noting, "We have been abiding by (international agreements to block protectionism)." Japan Oil, Gas and Metals National Corp. (JOGMEC),an organization affiliated with the Ministry of Economy, Trade and Industry, announced yesterday that it would establish a joint venture with Irkutsk Oil Co. to begin exploration for the development of oilfields in East Siberia. They are expected to drill two blocks stretching over roughly 8,142 square kilometers which is believed to hold a combined 100 million barrels of oil reserves. They will conduct drilling by 2013 to determine the reserves. If the exploration succeeds and the pipeline connecting Siberia with the Sea of Japan is completed, oil would be exported to Japan as well. (4) Russia Premier Putin makes no promise regarding territorial dispute, puts "strategic relationship" first NIKKEI (Page 2) (Full) May 13, 2009 Prime Minister Taro Aso and Russian Premier Vladimir Putin yesterday made it clear during their talks that the two countries would deepen their strategic relationship by promoting mutually beneficial cooperation in the economic area, such as energy development. The Japanese government has taken the move as a preparation to pave the way for making progress in the dispute over the four Russia-held islands off northeastern Hokkaido. Therefore, many in the Japanese government are greatly looking forward to seeing specific progress in the summit meeting in July between Aso and President Dmitry Medvedev. Some government officials are alarmed about developments because they sense that Moscow is simply flying a trial balloon because Putin refrained from making more specific remarks on the territorial issue. Both prime ministers were boisterous at a joint press conference after their meeting yesterday. Aso said: "(Their meeting) is an important step to raise the Japan-Russia relationship to a higher dimension." Putin: "I'm satisfied with dynamic developments in bilateral relations." The Russia economy, too, has been affected by the sharp plunge in crude oil prices and by the global economic recession. Therefore, Putin's major purpose to hold the meeting with Aso was to promote trade and economic exchanges. It can be said that Putin's Japan visit this time achieved such actual results as the signing of the Japan-Russia nuclear deal, which will pave the way for bilateral TOKYO 00001084 004 OF 010 exchanges in the nuclear power area. Putin stated on the territorial issue during the meeting: "While global power relations are rapidly changing, Russia like Japan strongly hopes to eliminate the negative legacy of the past." At the joint press conference, as well, he said: "An every possible option will be discussed at the Japan-Russia summit in July." He hinted at possible improvement in the territorial dispute. Putin, however, did not refer to a "creative approach," on which Aso and Medvedev agreed in their meeting in February, to expedite work to resolve the territorial row. He also pointed out that Russia was ready to discuss a peace treaty. A senior Japanese Foreign Ministry official has already taken a precaution, noting: "There will be no fresh proposal from Russia in July, either." What will likely trigger controversy is the fact that Putin took up again the 1956 Japan-Soviet Joint Declaration which stipulated the return of the two islands - the Habomai islet group and Shikotan Island. Referring to the process of drafting the 2001 Irkutsk Statement, which was regarded as the basic legal document for peace treaty negotiations, Putin said: "We had a hard time at that time." His remark can be taken a message that the return of the two isles was the limit. The Japanese public are mainly still calling for the return of all four islands. The leaders' strong political bases in their countries are a precondition for progress on the territorial talks. Some government officials are motivated by a desire to link talks on the Northern Territories to boosting the popularity of the Aso administration. If the Russian side is determined that the Japanese political situation will uncertain with the House of Representatives election drawing closer, chances are slim that Russia will make concessions. While the commotion created by Democratic Party of Japan (DPJ) President Ichiro Ozawa's announcement of his resignation is spreading, prospects for progress in the territorial talks will gradually become bleak. (5) Japan-US integration to apply pressure on North Korea on normalization SANKEI (Page 7) (Full) May 13, 2009 Hisahiko Okazaki, former ambassador to Thailand Former U.S. administration too impatient for results U.S.-DPRK negotiations since North Korea's development of nuclear weapons became an issue can be roughly classified into two types. First, there was the Framework Agreement during the Clinton administration. The basic assessment of the situation is quite clear from documents from that period: a military conflict might result in nearly 1 million casualties, so the only option was to compromise. The main points of the compromise were that the DPRK would freeze operations at the Yongbyon facility under IAEA inspections and would receive heavy fuel oil supplies in return. The DPRK abided by this compromise faithfully from 1994 to 2002. The other is the policy of calling North Korea part of an "axis of evil" after George W. Bush became president. Theoretically, this was a policy that would not be viable without a prediction of the DPRK's collapse. Subsequently, the Framework Agreement was suspended on TOKYO 00001084 005 OF 010 grounds of North Korea's suspected enrichment of uranium. But the DPRK not only did not collapse, it went on to resume operations at Yongbyon and conduct a nuclear test in 2006. In that sense, the Bush policy failed. Yet, it had not been doomed to failure. After the nuclear test, Japan and the U.S. imposed tough sanctions on North Korea and the country was in trouble immediately. If such sanctions had continued one more year, compromise from the DPRK might have been possible, not as a result of a Clinton-type "carrot," but owing to Bush's "stick," which was the essence of his policy. However, the U.S. Department of State hastened to reap the fruits of sanctions, without consulting with its ally Japan. Bilateral talks effective for substantive issues As a result, North Korea was given the rewards of the lifting of financial sanctions and removal from the list of state sponsors of terrorism and parts of the Yongbyon facility were destroyed. But now, the DPRK has announced that the facility will be restored. In other words, with hindsight, the DPRK was given absolutely unnecessary rewards, and the next administration has come to inherit the situation that had existed prior to Clinton's Framework Agreement. It is quite obvious that North Korea will demand at least oil or money as reward for its halting the restoration of the Yongbyon facility. Yet, plutonium that has already been produced will probably not be discarded. So the only outcome will be preventing further production of plutonium. So, what can we fall back on? The Six-Party Talks have not been able to produce any substantive results. The only achievement has been North Korea showing up at meetings occasionally through China's mediation. Any diplomat knows that it is meaningless to negotiate for mere participation in meetings in exchange for substantive issues. The most successful U.S.-DPRK negotiations in the past were those conducted by former defense secretary William Perry from 1998 to ¶1999. He succeeded in conducting on-site inspection of suspected underground nuclear facilities and restraining Taepodong launchings, while the only rewards given were the continuation of the Framework Agreement and some humanitarian aid. It is noteworthy that Perry based his negotiations on complete agreement with U.S. allies Japan and the ROK, and he held repeated trilateral talks. He succeeded in producing these results by presenting proposals approved by all three governments to the DPRK. The Japanese representative at that time, Ryozo Kato, who later became ambassador to the U.S., remembers this as the most successful and most satisfactory negotiations for Japan. As an issue for the future, I have no objections to resuming the Six-Party Talks. However, any diplomatic practitioner knows that as a general rule, bilateral talks are more suitable for resolving substantive issues than multilateral conferences. I would like to put my hopes on bilateral talks between the U.S. and North Korea based on full consultations with Japan and the ROK. Comprehensive denuclearization and complete solution to abduction issue I would like to present my proposals here. If diplomatic relations between Japan and North Korea are normalized, the DPRK will probably demand compensation comparable to the $500 million paid at the time of Japan-ROK normalization in ¶1965. Considering the difference between the size of the population TOKYO 00001084 006 OF 010 between North and South Korea and foreign exchange rate changes since then, the amount of compensation will be determined by the normalization talks. While the Japanese government has never mentioned any specific amount, 1 trillion yen is a widely talked about figure. This is an enormous amount compared to the concessions that the U.S. has ever offered and can possibly serve as a reward for comprehensive denuclearization. My proposal is to make this the joint asset of the Japan-U.S. alliance. That is, negotiations for normalization with the DPRK by Japan and the U.S. would be integrated; the comprehensive discontinuation of nuclear programs and a complete solution to the abduction issue would be made an uncompromising condition; and the U.S. would go into the negotiations as the representative of Japan and the ROK. The ROK will be the main beneficiary of the U.S.-DPRK and Japan-DPRK normalization, and it will most probably have an interest in the proper balance with the compensation paid at the time of Japan-ROK normalization, so its participation is quite natural. With such an explicit and just goal, there would be legitimate justification to continue to implement the strict sanctions imposed in light of the recent missile experiment, no matter how tough they are, until the goal is achieved. This will also bring about consistency in the strategy of Japan and the U.S. against North Korea. North Korea would probably react strongly, but militarily, its conventional forces are weak and its nuclear weapons and missiles are thought to be still in the developmental stage. It will probably not have a strategy to counter the above proposals for the time being. (6) The election and industrial groups: Anxiety about post-Ozawa DPJ, as new president may redraw strategy NIKKEI (Page 2) (Full) May 13, 2009 "President (Katsuya) Okada may be anti-labor union." "Will Mr Ichiro Ozawa still be involved with the next House of Representatives election?" Grassroots support to change? The election of the new Democratic Party of Japan (DPJ) president on May 16 became a topic of discussion at an informal executive meeting at Rengo (Japanese Trade Union Confederation) headquarters on May ¶12. Various opinions were voiced, but the officials merely decided to issue a public statement that went, "Our stance of seeking a change of administration remains unchanged." Rengo had been concerned that victory in the Lower House election will be difficult if the Nishimatsu Construction Company scandal dragged on. Rengo President Tsuyoshi Takagi remonstrated with Ozawa in April: "The election situation is very tough." In that sense, Ozawa's resignation came as a temporary relief. However, this does not mean that Rengo's concerns have been dispelled. Ozawa had shown admirable solicitousness -- by attending dinner parties with local labor groups and filling the cups of rank-and-file union members all around, for instance. If his successor negates Ozawa's campaign style, a senior Rengo official worries that "all our efforts so far will come to nothing." With Ozawa's announcement of his resignation, the DPJ is shifting even more to the combat mode for the next Lower House election. Will there be any changes in its efforts to enlist support groups? Rengo TOKYO 00001084 007 OF 010 is not the only group that is watching this issue. Ozawa's efforts to encroach on Liberal Democratic Party (LDP)-affiliated organization so far also need to be watched closely. At the end of the day, the focus of attention is "who will be the next president?" Ozawa has indicated his intention to continue to be involved with campaign strategy after stepping down as president. If Secretary General Yukio Hatoyama, who has supported Ozawa, becomes the new president, the dominant view is that "there will be no change in the campaign strategy." Distance from the labor unions Okada, rumored to be a candidate for party president, once engaged in the first-ever policy consultation with the Nippon Keidanren (Japan Business Federation) in an attempt to reduce dependence on labor unions when he was president in 2005. It is believed that if he becomes president, he will give more importance to winning the support of unaffiliated voters. Meanwhile, the Postal Policy Research Institute (Yusei Seisaku Kenkyukai or Yuseiken),consisting of members of the National Association of Postmasters (Zenkoku Yubinkyokucho Kai or Zentoku), has decided to support 175 of the DPJ's 261 official candidates. It will maintain this posture regardless of the outcome of the presidential election. This group reckons that a change of administration is the shortcut to its long-cherished dream of reviewing the postal privatization policy. There are other groups with which Ozawa has developed a close cooperative relationship, such as the Association of Land and House Investigators, or the National Association of Private Day Care Centers. The distance the new DPJ leadership keeps from these groups will also be a focal issue from now on. (7) DPJ becomes refreshed by Ozawa's resignation!? Needs to present policies to counter ruling camp (Part 2) TOKYO SHIMBUN (Page 23) (Full) May 12, 2009 To a question of who is desirable as Democratic Party of Japan President Ichiro Ozawa's successor, Harumi Arima, a political commentator, replied: "It is said that both the Liberal Democratic Party and the DPJ lack competent members, but focusing on his being extremely scrupulous when it comes to money, I recommend Vice President Katsuya Okada. The current structure under the lead of Secretary General Yukio Hatoyama and Deputy President Naoto Kan, which was launched 10 years ago, has not been effectively working. Seiji Maehara failed to manage the party as a result of playing up his "youthfulness (or immaturity)." If Okada assumes the presidency, the party will surely be refreshed." Difficult finding of qualified successor Minoru Morita, a political commentator, also pointed out the lack of members who have the credentials to succeed Ozawa. He flatly said: "There is none who has the competence required to lead the DPJ. Hatoyama, who supported Ozawa until the last moment, might be the most likely candidate. But the DPJ lacks policies, so I think it unlikely for the party to be placed at an advantage in the next general election owing to Ozawa's resignation." TOKYO 00001084 008 OF 010 Reiko Zanma, a freelance producer, considers that Maehara is a desirable successor to Ozawa. Maehara once assumed the party presidency but resigned, taking responsibility for an e-mail fiasco. She recommends Maehara through the process of elimination. "Hatoyama, Kan and Okada are no longer fresh. Their policy stances have already known, so they will be unable to appeal to voters' emotions. But Maehara is still an unknown quantity. In this sense, I think he is desirable." Hiroko Hagiwara, and economic journalist, remarked: "Mr. Ozawa has dragged an image of being engaged in money-driven politics since he was an LDP member. In contrast, Mr. Okada has given an image of being clean. If Okada becomes DPJ president, the party can distinguish itself from the LDP. If Akira Nagatsuma and other members support him, public support for the party may pick up again." Hideki Wada, a psychiatrist, made this remark: "Although this option might be a gamble, I pick Okada. If Okada, who has given an image of being serious and steady, is installed in the presidency, Prime Minister Aso might look silly in the eyes of people. The question is whether Okada, who seems to have little flexibility, can cleverly handle economic and diplomatic challenges. The key lies in whether the party can underscore the image that it implements policies after they are presented." Ozawa cited a change of government as the main reason for his resignation. Arima indicated that there is still a high possibility of a regime change, remarking: "The energy calling for a regime change is a matter separate from growing calls for Ozawa's resignation. Rather, Ozawa's resignation might encourage voters to support the DPJ without hesitation." But he added: "The DPJ might lose support from those who wanted to see Ozawa assume the premiership. Still many months left before general election Hagiwara presented a similar view to Arima's: "Although I do not think Mr. Ozawa did anything wrong, the arrest of his aide deteriorated the party's image, resulting in boosting public support of the LDP. The new-type influenza scare has also contributed to giving a boost to the Aso administration for its countermeasures. With this (Ozawa's resignation),I think, the situation will change." Even so, in the DPJ, there are also some grounds for concern. Hagiwara commented: "Some predict that the next general election might take place in September. During the period up to the election, the DPJ, a hodge-podge group, could be scattered apart. The question is whether such veterans as Mr. Ozawa will offer strong support (to the new president). Either way, the DPJ will face a crucial juncture from now." Wada made this remark: TOKYO 00001084 009 OF 010 "If the main opposition party continues to take its conventional offensive approach against the ruling parties, no change will occur. ... The Aso administration has begun to seriously tackle policies in the belief that the chance to win is now appearing before it, since it has made no errors. In order to turn around the tables, the DPJ needs to come up with policy measures capable of competing with the ruling parties' measures." Meanwhile, in analyzing the illegal donation cases, in which Ozawa's first state-funded secretary was arrested, Toin University of Yokohama Law School Graduate School Professor Nobuo Gohara, a former public prosecutor of the Tokyo District Public Prosecutors Office, urged all people to continue to pay attention to this case, "considering what this case was." He said: "I wonder if this was that serious a case. Most lawmakers seem to be doing the same thing. (His office) did not hide the donations it had received, and their total amount was small. I have doubts about the prosecutor's charge that (Ozawa) should assume responsibility for infringing on the principle of making moves of political funds transparent. There is a problem in the arrest (of his secretary) by the prosecutor. ... Election circumstances probably were behind his decision, but if a candidate for the premiership is driven to step down over such an incident, the Japanese democratic system will collapse. ... The media's stance of paying attention only to whether (Ozawa) would resign also poses a problem" (8) 2nd MSDF dispatch eyed for July against pirates NIKKEI (Page 2) (Abridged) May 2, 2009 The government plans to send a second batch of Maritime Self-Defense Force destroyers in July for an antipiracy mission in waters off the eastern African coast of Somalia. A government-introduced antipiracy bill, now before the Diet, has already cleared the House of Representatives. This is the first legislation that allows the Self-Defense Forces to use weapons overseas outside the scope of legitimate self-defense and emergency evacuation. The Defense Ministry will provide MSDF personnel with special education and training for about a month in order to avoid bringing about an unexpected happening with the new set of standards for their use of weapons. The antipiracy bill passed through the House of Representatives on April 23, and the legislation will be debated in the House of Councillors after the early May holidays. The leading opposition Democratic Party of Japan (Minshuto) will not try to draw out the Diet deliberations, so the bill is expected to be enacted into law during the current Diet session. The new law will come into effect 30 days after its Diet passage. After the legislation's enactment, the government will begin to make preparations in full swing for another MSDF dispatch to Somalia waters. The government will send out a second squadron of MSDF destroyers as soon as the new law comes into effect. The Defense Ministry is now working out its new rules of engagement (ROE) for SDF troops on overseas missions. The antipiracy legislation allows the SDF to fire on pirate ships if they refuse orders to stop or do not stop tailing commercial ships. Unlike the SDF's overseas activities in the past, this is the first ROE TOKYO 00001084 010 OF 010 regulation that incorporates cases in which the SDF is allowed to use weapons before coming under fire. The question is what to do up until the second dispatch of MSDF destroyers is dispatched. The government has sent out the first squadron of MSDF destroyers to waters off Somalia under the current law. The dispatched MSDF destroyers, after arriving in the Gulf of Aden in late March, started to escort Japanese-registered and Japanese-chartered ships there for maritime security operations under the current law. The MSDF destroyers convoyed a total of 36 ships in 12 shuttles during one month up until April 30. Under the current law, the MSDF is only allowed to escort Japanese ships and Japan-linked ships and use weapons for legitimate self-defense or emergency evacuation only. In the past month, however, the MSDF destroyers already received three radio calls from foreign ships for help. They rushed to those foreign ships and repelled suspicious boats with their search lighting and SOUND warning. However, something unexpected could happen there. Even after warning, the pirates may continue to attack commercial ships. In that case, what the MSDF can do under the current law is limited. The government is also mulling whether or not to let the MSDF destroyers break in between commercial ships and pirate ships. In that case, they could fall under attack from pirates with rocket launchers. The government and the ruling parties had plans to apply the new law, after its enactment, to the currently deployed MSDF destroyers. However, there could be an accident as a result of applying the different ROE regulation to one and the same squadron. "We only pray until the second squadron replaces the first one," said a senior Defense Ministry official. ZUMWALT