DAILY SUMMARY OF JAPANESE PRESS 06/24/09

UNCLAS SECTION 01 OF 09 TOKYO 001424

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SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 06/24/09

INDEX:

(1) Japan, China hold strategic dialogue, discuss North Korea's
nuclear issue (Jiji)

(2) North Korea on verge of carrying out provocative act: What move
will the Japan-U.S. alliance make? (Sunday Mainichi)

(3) Report on U.S. military hospital in Afghanistan; endless fight
for life; children caught in the fighting, traumatized soldiers
(Mainichi)

(4) Basic fiscal policy guidelines: Prime minister's identity
oveshadowed (Mainichi)

(5) Examining the Aso administration (Part 2): Response to
once-in-a-century economic crisis; low support rating despite pork
barrels (Tokyo Shimbun)

(6) Report on back-door political donations involving Yosano (Asahi)


(7) Prime Minister's schedule, June 23 (Nikkei)

ARTICLES:

(1) Japan, China hold strategic dialogue, discuss North Korea's
nuclear issue

JIJI.COM (Full)
11:20, June 24, 2009

Beijing, Jiji Press, June 24

Vice Foreign Minister Mitoji Yabunaka and his Chinese counterpart
Wang Guangya held a Japan-China strategic dialogue at the Diaoyutai
Guest House in Beijing on June 24, where they exchanged views on
North Korea's development of nuclear arms and other issues.

At the beginning of the meeting, Wang stated: "We would like to hold
an in-depth exchange of views on China-Japan relations as well as
international and regional issues." Yabunaka pointed out that "the
North Korean issue is approaching a very critical stage in East
Asia," indicating his expectations for productive discussions
between the two countries on the North Korean situation.

Yabunaka asked China to implement the UN Security Council sanction
resolution against North Korea. He is also expected to request the
start of negotiations to conclude an agreement on joint development
of gas fields in the East China Sea at an early date.

(2) North Korea on verge of carrying out provocative act: What move
will the Japan-U.S. alliance make?

SUNDAY MAINICHI July 5, 2009 issue
(Pages 130 and 131) (Abridged slightly)

The North Korean regime is wavering due to the deteriorating illness
of the General. Hardening its stance in the wake of the UN Security
Council's adoption of a resolution in response to its underground
nuclear test, the North has even signaled the launch of a long-range
missile. The country is on the verge of taking another provocative

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action. How will the Japan-U.S. alliance, which has kept Japan away
from war for over 60 years, react?

On June 9, a Liberal Democratic Party (LDP) national defense joint
meeting decided to propose that the country should possess
capabilities to strike enemy bases ahead of the planned revision of
the National Defense Program Guidelines (NDPG) with an eye on the
increasingly tense situation in North Korea.

In the meeting, former Prime Minster Ichiro Hatoyama's 1956 Diet
reply "We should not sit and wait for our own destruction" was
cited, according to a political journalist.

Hatoyama went on to say (before the Diet in 1956),"If there is no
other means, (attacking enemy bases) could be within the bounds of
self-defense."

Although Japan has left its offensive capability to U.S. forces
under its pacifist constitution, Hatoyama's reply was intended to
allow Japan to possess an offensive capability though under limited
conditions.

LDP National Defense Division chief and Lower House member Yasuhide
Nakayama explained it this way:

"North Korea is believed to have 200 - 300 Nodong missiles. This
specifically means that when it has become clear that the North has
begun preparing to turn and launch those missiles at Japan, our
country will possess Tomahawk cruise missile and the like to attack
its missile bases."

Nakayama's explanation, given after the North's nuclear test that
could lead to the miniaturization of its nuclear warheads, seems to
have had deterrence against North Korean missile attacks in mind.

Meanwhile, Selig Harrison, director of the Asia Program of the
Center for International Policy, testified before the House Foreign
Relations Committee on June 17, expressing this worrisome view:

"In the event of another war with North Korea, in my view, it is
Japan, not South Korea, that North Korea would attack, because
nationalist younger generals with strong anti-Japanese sentiments
now hold strong positions in the North Korean leadership following
the deterioration of Kim Jong Il's illness."

A foreign affairs journalist takes this view:

"The accuracy of North Korean missiles is still low. It will take
time for the North to downsize its nuclear warheads. Chances are
slim for the North to attack Japan, which would involve North
Koreans living in Japan."


In the sense of underpinning the threat from North Korea,
(Harrison's view) is likely to give momentum to the Aso cabinet
which is playing up its ability to run the government regarding
foreign and security affairs.

Ukeru Magosaki, a former Foreign Ministry Intelligence and Analysis
Bureau chief, a former National Defense Academy professor, and the
author of Nichibeidoumei no Shoutai (True Picture of the Japan-U.S.
Alliance),has this view:

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"Since President Bush's second administration, the United States has
reduced its own burden, calling its allies in East Asia for
role-sharing. The recent argument on possessing strike capabilities
can be said to be an extension of the pro-U.S. policy course in line
with the United States' wishes to a certain extent rather than a
call for nuclear armament and autonomous defense that might deviate
from the Japan-U.S. security alliance. The basic stance will not
change under the Obama administration."

True, the United States, worn out by the two antiterrorism wars and
also hit by the financial crisis, is giving up its sole superpower
status. Is it safe to follow the wishes of such a country? A defense
journalist, for instance, warned:

"Striking an enemy base is basically tantamount to a preemptive
strike. Most Nodong missiles, which have Japan in their range, are
stored underground, so grasping everything in advance is difficult.
The time required for preparing to launch Nodongs, such as fueling,
is much shorter than that for the Taepodong missile that was
launched in April. A preemptive strike can destroy only a small
number of Nodong missiles. Following Japan's attack, the North would
launch massive counterattacks by using remaining Nodongs."

In other words, in the event Japan-U.S. alliance attacks began with
Japan's preemptive strike, Japan alone would be exposed to the
North's retaliatory attacks.

Magosaki cited the following case:

"During the 1970s, the United States tried to deploy Pershing II
missiles in Europe to counter the Soviet Union's SS-20 mid-range
nuclear missiles. But the public in West Germany reacted strongly to
the plan at first. In short, they were alarmed at the risk of their
country turning into a battlefield."

The enemy-base strike argument has the risk of victimizing many
Japanese people once the preemptive strike button is pressed.

U.S. prefers a soft landing

There is another problem, which is unique to Japan. Younger North
Korean officers harbor anti-Japanese sentiment because they are
angry with the fact that their country admitted to the abduction of
Japanese nationals and apologized for it in the 2002 Japan-DPRK
Pyongyang Declaration, according to Harrison.

An LDP defense policy specialist also noted:

"Needless to say, resolving the abduction issue is important. It can
be said that of all the Six-Party members, Japan is the only country
that is strongly hoping for the collapse of the North Korea regime
for resolving the abduction issue. This might be used as the reason
to expel (Japan) from the six-party framework."

Japan needs to carefully observe other countries' orientation toward
a soft landing.

Magosaki added:

"The Obama administration has sent both soft and hard messages that
it will support the continuance of the (North Korean) regime if it

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comes over to the U.S. side, while making it clear that the United
States does not allow the North to possess nuclear weapons. The
trend is common among the Six-Party member countries excluding
Japan, and there is no denying that Japan's hard-line stance will
stand out."

There are indications, according to Magosaki, that the United States
and other members are dealing with the North as a quasi nuclear
state in order to prevent the country from carrying out another
provocative act.

Magosaki continued:

"The United States occasionally shifts its diplomatic strategy
significantly, so cautiousness is necessary. The hard-line argument
in Japan followed the foreign policy of the first Bush
administration that labeled North Korea a part of an 'axis of evil.'
Falling behind changes, it has now lost touch with (the policies of
other countries)."

Although the Japan-U.S. alliance is dependable, the motives of the
two countries do not always meet.

The United States' intelligence-gathering capability defies
conjecture.

The aforementioned defense journalist explained:

"It is said that a U.S. special force has a handle on General
Secretary Kim Jong Il's dozen or so houses and that it is always
keeping a watchful eye on them. (The United States) has the
sufficient ability to implement an assassination operation. The
North Korean leadership must be in a considerably tense situation.
They must carefully watch for any signs of a provocative act."

The series of provocative acts by North Korea has exposed the
pitiful reality that Japan has to obtain information even on missile
launches and nuclear tests from U.S. forces.

A former diplomat noted:

"Efforts must be made to have independent means to collect
information. A country that solely relies on its ally cannot
negotiate anything with other countries on equal footing."

Is it the true meaning of not sitting and waiting for our own
destruction?

(3) Report on U.S. military hospital in Afghanistan; endless fight
for life; children caught in the fighting, traumatized soldiers

MAINICHI (Page 16) (Full)
June 24, 2009

Tomoko Oji, Bagram Air Base, Afghanistan

I visited the Bagram Hospital, the largest medical facility of the
U.S. forces in Afghanistan. Children caught up in the fighting are
brought here, and traumatized American soldiers also come here for
counseling. The medical staff appeared to be exhausted. It looked to
me that people were trying to find an "exit" from the endless
fighting.

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A tiny body was lying on a bed in the intensive care unit. He had
numerous tubes attached to him. This boy had been hit by a bomb of
the armed insurgents and had numerous metal fragments in his
abdomen. But he had managed to survive. The nurse said: "We don't
even know his name."

Another boy was working hard on his rehabilitation, maneuvering his
own wheelchair. He is Aziz Laha (as transliterated),10. He was
caught in the fighting between the Taliban armed insurgents and the
Afghan army in front of his house east of the Bagram Air Base and
suffered bullet wounds in his hands and feet. He smiled and told me:
"The Americans are nice." However, his big brother, 22, said: "They
treated him, but I still don't like America. I also hate the Taliban
for planting mines in children's playgrounds."

Most of the beds in the hospital (32) are used by the locals. An
average of 7-10 patients come for treatment each day. Eighty percent
are Afghans and half of them are children below 12 years old. A
nurse, Ms. Codington, 49, said tearfully: "Medical facilities are
inadequate in Afghanistan. I think children are unable to receive
rehabilitation treatment after they are discharged."

I was told by one hospital official that: "Treatment of the locals
cultivates pro-American sentiments. This also contributes to
gathering information on the armed insurgents."

American soldiers make up 20 percent of the hospitalized patients.
There was no confined American soldier on the day I visited. A few
injured armed insurgents a month are also brought here for
treatment.

Some 10 soldiers were seated in the waiting room that had a sign
reading: "Combat Stress and Control." About 300 American soldiers
suffering from post-traumatic stress disorder (PTSD) and other
illnesses come here for counseling each month. With the protracted
war against terrorism, nearly 40 percent of the soldiers have been
on combat duty twice. Lt. Col. Smith, 48, a female military doctor
pointed out that, "Multiple assignments increase the soldiers'
stress level."

(4) Basic fiscal policy guidelines: Prime minister's identity
oveshadowed

MAINICHI (Page 5) (Full)
June 24, 2009

The government on June 23 adopted at a special cabinet meeting the
2009 basic fiscal policy guidelines. The Aso-led Kantei failed to
make a visible move in the face of the Liberal Democratic Party's
(LDP)'s last-hour effort to water down the fiscal policy guidelines.
Failing to curb the ruling parties' call for greater spending, the
prime minister, whose cabinet is suffering from sluggish support
ratings, ended up giving the impression that he lacks leadership.

Noting that the government effort to curb the increase in social
security and welfare expenditures by 220 billion yen a year has just
about reached its limit, the prime minister did not include curbing
the natural increase in social security spending in the fiscal 2009
budget. It is urgent for the prime minister, whose pet slogans are
"medium welfare and medium burden" and "secure society," to
reconstruct the social security system. From the beginning, his

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stance has been that given the present state of social security,
virtually abandoning the government policy of constraining social
security expenditures by 220 billion yen cannot be helped.

Meanwhile, he was concerned that abandoning that policy could
trigger pressure for spending for public works. If discipline to cut
back on spending is relaxed, fiscal reconstruction will become
further off. Constraining expenditures is a precondition for a
future hike in consumption tax, which the prime minister will not
yield on. It is also an aspect that differentiates the ruling
parties from the Democratic Party of Japan (DPJ). In the LDP, there
are those who are in favor of reforming expenditures, attaching
importance to maintaining fiscal discipline. These people include
former Secretary General Hidenao Nakagawa. As such, it was necessary
for the prime minister to take into account that if he makes a
drastic policy change, he will come under fire as having
backpedalled on reform, as an aide to the prime minister put it.

The Kantei appeared to have been unable to take action on its own
initiative under such a situation.

The prime minister told reporters on the 23rd: "(The constraint on
an increase in social security spending by 220 billion yen) must be
revised properly. Otherwise, its negative impact could spread." In
the meantime, the government is responsible for fiscal
reconstruction over the mid-term. As such, we will implement these
two policies properly. I have told this to Mr. Yosano, who is has
been in charge of economic and fiscal policy as well as financial
services for a long time. Social security or fiscal reconstruction -
the prime minister's message remained equivocal all the way.

DPJ President Hatoyama says: "The basic fiscal policy guidelines
(so-called big-boned guidelines) are full of holes."

Democratic Party of Japan (DPJ) President Yukio Hatoyama during a
press conference on the 23rd criticized the government's 2009 basic
fiscal policy guidelines, noting, "They call the guidelines
big-boned, but their bones are full of holes. I do not understand
what leaving in documents but deleting verbally means." He stressed,
"We will come up with our policies without regard to the public
pledge made by the government, which is not functioning properly."

(5) Examining the Aso administration (Part 2): Response to
once-in-a-century economic crisis; low support rating despite pork
barrels

TOKYO SHIMBUN (Page 2) (Full)
June 23, 2009

On September 29, five days after the inauguration of the Aso
cabinet, the New York Dow Jones Industrial Average suffered its
worst drop in history. On October 7, the Nikkei average of the Tokyo
Stock Exchange went below 10,000 yen for a while for the first time
in 4 years and 10 months.

Prime Minister Taro Aso, who appeared to lack a sense of urgency
when he first took office, finally went into a serious mode. He
shelved his plan to dissolve the House of Representatives, which was
once set for early October, and scrambled to take steps to boost the
economy.

What made the prime minister decide to give top priority to the

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economy? For sure, the worsening of the economic indicators, such as
the stock prices, was the main reason, but there were also political
calculations.

At that time, a survey conducted by the Liberal Democratic Party on
the situation in the Lower House election showed that the ruling
parties were uncertain of maintaining their majority control. It
seems that the party had judged that if the prime minister "did not
work seriously on economic measures, (the ruling bloc) could not
win, once the Diet was dissolved."

The government announced additional economic measures on October 30
and additional emergency economic measures on December 12. These
were incorporated into the second FY08 supplementary budget and the
FY09 budget, and they were characterized by bold steps to stimulate
consumption. Fixed-amount cash handouts and drastic cuts in
expressway tolls, worth a total of 2 trillion yen, were included in
the second supplementary budget.

Tax grants to the local governments were increased by 1 trillion yen
in the FY09 budget, reflecting Aso's pet theory that "the local
governments only need 1 trillion yen that they can use freely." In
addition, another trillion yen was allocated as reserves for
emergency economic measures.

Although massive fiscal spending is supposed to bring about a rise
in long-term interest rates and other harmful effects, Aso did not
mind, thinking "one needs to respond in an unusual way in an
emergency." The prime minister did have his own convictions about
the fiscal spending. While the economic measures announced between
late 2008 and this spring have been criticized as pork barrel
largesse, there is no denying that they were put forth very
quickly.

The Nikkei stock average, which went down to 7,054 yen on March 10,
has recently recovered to around 10,000 yen. In terms of the
economic indicators, the coincidence index, which moves in parallel
with economic trends, rose for the first time in 11 months in April.
There have been signs of improvement in the economy.

Even though the cynical view of some private sector economists is
that, "The improvement in the economic indices is due to corporate
efforts to adjust inventories" and has nothing to do with the Aso
administration's economic policies, the pump-priming indeed helped
resuscitate the economy.

Chief Cabinet Secretary Takeo Kawamura stresses that, "This is
founded on the Aso cabinet's strong emphasis on the importance of
economic measures and its unprecedented policy action of formulating
four budgets in a row (first and second FY08 supplementary budgets,
FY09 budget, and FY09 supplementary budget)."

However, the support ratings of the Aso cabinet have again been
following a downward trend in the polls, in inverse proportion to
the improvement in economic indicators. Support has dropped to 17.5
percent in a poll conducted by Kyodo News on June 13-14, which is,
no doubt, in the danger zone.

The Aso administration has proceeded at full speed, thinking that
the improvement of the economic indices is the only way to buoy the
administration. Perhaps the rise in economic indices and the drop in
the cabinet support rating are two ironical lines in the graph

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showing that the people are rejecting the Aso administration's pork
barrel economic measures instinctively.

(6) Report on back-door political donations involving Yosano

Asahi.com (Full)
13:00, July 24, 2009

Commenting on Mainichi Shimbun's report that Finance Minister Yosano
and former state minister for administrative reform Yoshimi Watanabe
had received back-door political donations from a commodity futures
company through a political organization, Yosano told reporters in
Tokyo: "I have not received any petitions concerning commodity
transactions from that company on legal or administrative terms. I
believe there is in essence no problem either in accordance with the
Political Funds Control Law or in formality terms."

Watanabe on June 24 told reporters in Tokyo, "I have not heard about
how that company collected the money. I have had a connection with
it since my father was alive. My perception of that company is it is
a political organization that collects donations from individuals."
He also said that if it is found that the company had illegally
collected the money, he would return it.

Their accountability for the matter will likely be pursued amid a
time when the way political funds are received has been brought into
question, triggered by the illegal political funds donations made by
Nishimatsu Construction to Ichiro Ozawa.

Chief Cabinet Secretary Kawamura during a press conference the same
day revealed that Yosano told him on the phone that he would take
responsibility for explaining the matter on his own. Kawamura then
said, "It is important to secure the transparency of political funds
and manage it in strict fairness." Liberal Democratic Party (LDP)
Secretary General Hiroyuki Hosoda said the same day, "We must
investigate what really happened."

According to their political funds reports, the political
organization reported on by the daily is headed by the owner of a
commodity futures trading company in Tokyo. The political
organization's office was at one time located inside that company.
It donated a total of 55.3 million yen to Shunzan-kai, Yosano's fund
management organization, between 1992 and 2005 in the form of
purchasing tickets for Yosano's fund-raising parties. Yosano served
as minister of international trade and industry between 1998 and

1999. He was supervising commodity futures transaction.

The political organization had also donated a total of 35.4 million
yen to Onkochishin-no-Kai, Watanabe's fund management organization.

(7) Prime Minister's schedule, June 23

NIKKEI (Page 2) (Full)
June 24, 2009

08:25 Departed from Haneda Airport on JAL 903.
10:31 Arrived at Naha Airport. Received by Okinawa Vice Governor
Katsuyo Asato and others.
11:17 Offered flowers at the National Okinawa Cemetery on the Peace
Memorial Park in Itoman. Afterward attended the annual memorial
ceremony for the war dead.
13:27 Met at Naha Airport Lower House Speaker Kono and Okinawa and

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Northern Territories Issue Minister Sato.
14:09 Departed from the airport on JAL 910 seen off by Governor
Hirokazu Nakaima and others.
16:10 Arrived at Haneda Airport.
17:20 Attended a Council on Economic and Fiscal Policy meeting held
at the Kantei, followed by a special cabinet meeting. Education
Minister Shionoya stayed on.
18:20 Filed away documents at his private office in Nagatacho.
18:43 Attended a pep rally for candidates running in the Tokyo
assembly election, held at the Japan Education Center in
Hitotsubashi.
19:17 Arrived at his official residence.
20:25 Met LDP Public Relations Headquarters chief Furuya.

ZUMWALT