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UNCLAS SECTION 01 OF 08 TOKYO 007163 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA; 
WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST DIVISION; 
TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS OFFICE; 
SECDEF FOR JCS-J-5/JAPAN, 
DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA 
FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR; 
CINCPAC FLT/PA/ COMNAVFORJAPAN/PA. 
 
E.O. 12958: N/A 
TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA
 
SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 12/28/06 
 
 
Index: 
 
1) Top headlines 
2) Editorials 
3) Prime Minister's daily schedule 
 
4) JDA chief orders consideration be given to changing 
Futenma-relocation plan, including revision of the V-shaped runway 
at alternate site 
 
5) Foreign minister of Japan, ROK agree to strengthen cooperation on 
restarting six-party talks on North Korea 
 
6) First round of meetings ends for joint Japan-China study group on 
history 
 
Sata flap: 
7) Administrative Reform Minister Sata quits over fund scandal; 
Watanabe immediately picked as successor 
8) Reform minister Sata's resignation over money scandal another big 
blow for the Abe administration, with opposition camp demanding he 
quit the Diet, too 
9) Reform minister Sata in resignation statement avoids mention of 
78 million yen in unaccounted political funds 
10) Sata quits, citing 'inappropriate" action, but expert concludes 
that the reform minister completely broke the law 
11) Opposition camp vows to go on the offensive in January when new 
Diet opens 
 
12) Successor body to the Regulatory Reform Council already named 
 
Articles: 
 
1) TOP HEADLINES 
 
Asahi, Mainichi, Yomiuri, Sankei & Tokyo Shimbun: 
State Minister in Charge of Administrative Reform Sata resigns to 
take responsibility for improper bookkeeping for political funds; 
Yoshimi Watanabe picked as successor assume 
 
Nihon Keizai: 
Survey of 100 presidents: 35% think economic growth "will continue 
for one or more years"; 26% say, "Growth rate will slow down," 
expressing concern about consumer spending 
 
Akahata: 
Government aims to submit to the ordinary Diet session a bill aimed 
at introducing a system of no pay for overtime (white-collar 
exemption) 
 
2) EDITORIALS 
 
Asahi: 
(1) Sata's resignation as state minister for administrative reform: 
A reward-oriented appointment now comes back to haunt the prime 
minister 
(2) New chair of the government's tax panel: How will he regain 
public trust? 
 
Mainichi: 
(1) Resignation of Sata: Prime minister's responsibility for 
appointing him questioned 
 
TOKYO 00007163  002 OF 008 
 
 
(2) Kosai-led tax panel: No delay allowed in radical reform debate 
 
Yomiuri: 
(1) Resignation of Sata: Rebuild the system to produce results 
(2) Poisoned wine incident is a challenge to the lay judge system 
 
Nihon Keizai: 
(1) Japan needs to achieve primary balance as quickly as possible 
(2) Resignation deals a blow to Abe administration 
 
Sankei: 
(1) Sata's resignation a good opportunity for change 
(2) Kosai-led tax panel: A proper tax system should be rebuilt 
 
Tokyo Shimbun: 
(1) Chain of resignations reveals weakness of the administration 
(2) Reform of working hours: Now is not the time 
 
Akahata: 
Sata's resignation: Abe cabinet's "code of conduct" now questioned 
 
3) Prime Minister's Official Residence (Kantei) 
 
Prime Minister's schedule, Dec. 27 
 
NIHON KEIZAI (Page 2)  (Full) 
December 28, 2006 
 
09:01 
Recorded for the government's Internet TV "Live Talk at Kantei." 
 
10:01 
Met South Korean Foreign Affairs and Trade Minister Song Min Soon, 
with Asian and Oceanian Affairs Bureau Director General Sasae. 
Followed by Finance Minister Omi. Later met Foreign Vice Minister 
Yachi. 
 
10:55 
Met Deputy Foreign Minister Yabunaka, European Affairs Bureau 
Director General Harada, and Economic Bureau Director General 
Ishikawa, with Deputy Chief Cabinet Secretary Suzuki and Assistant 
Deputy Chief Cabinet Secretary Ando. 
 
13:15 
Visited Tok Bearing Co. to make a tour in its plant. Later, met 
President Hiroshi Yoshikawa and others, with Deputy Chief Cabinet 
Secretary Shimomura. 
 
SIPDIS 
 
13:58 
Arrived at Jujo Ginza shopping street, with New Komeito President 
Ota and Shimomura. 
 
15:35 
Met at Kantei with Chief Cabinet Secretary Shiozaki, and deputy 
chief cabinet secretaries Shimomura, Suzuki, and Matoba. 
 
17:03 
Visited the Imperial Palace for an informal representation. 
 
18:25 
Arrived at Kantei. 
 
 
TOKYO 00007163  003 OF 008 
 
 
19:10 
Met Shiozaki, Shimomura, Suzuki, Matoba, and Special Advisor Seko. 
 
20:07 
Returned to his official residence. 
 
4) JDA chief instructs that consideration be given to revising 
government plan for Futenma relocation, including revision of 
V-shaped runway 
 
YOMIURI (Page 2) (Full) 
December 28, 2006 
 
It was learned yesterday that Defense Agency (JDA) Director General 
Kyuma has instructed administrative officials to study the 
possibility of revising the government's plan to relocate the US 
Marine Corps' Futenma Air Station (Ginowan City, Okinawa Prefecture) 
to the shoreline of Camp Schwab (Nago City).  According to a senior 
official in JDA, Director General Kyuma said: "It would be good if 
the views of the local communities and the US forces would match. 
How about not dislocating the weed bed (where dugongs feed)? The 
runway could be something other than V-shaped, as well."  Upon 
receiving his instruction, JDA is thinking of considering such 
revisions as placing the alternate facility dozens of meters more 
toward the sea than the government plan's location, and revising the 
actual plan that now calls for a V-shaped double runway. 
 
Okinawa Governor Hirokazu Nakaima, attending the meeting of the 
joint council of central government and prefectural representatives 
on Dec. 25, reiterated his stance that he could not accept the 
government's plan as it stands now. On hearing this, JDA apparently 
started to consider the possibility of revising the government plan, 
aiming at reaching agreement with the prefecture and local 
communities. There are some in JDA who are negative about changing 
the plan, so it is unclear at this point of the future of the 
study. 
 
5) Japan, South Korea will strengthen cooperation on six-party 
talks; Visiting South Korean Foreign Minister Song meets with Prime 
Minister Abe, other Japanese leaders 
 
SANKEI (Page 2) (Full) 
December 28, 2006 
 
Prime Minister Shinzo Abe yesterday met at the Prime Minister's 
Official Residence with visiting South Korean Minister of Foreign 
Affairs and Trade Song Min Song. During the talks, Abe referred to 
the six-party talks on North Korea's nuclear issue and stated, "I'd 
like to join hands so as to produce practical results." The two 
agreed to step up cooperation in order to restart the multilateral 
talks. Song stated, "We on the part of the South Korean government 
has a good understanding of Japan's abduction issue." 
 
Abe welcomed Song's choice of Japan as his first overseas 
destination after assuming office as foreign minister early this 
month. On relations with South Korea, Abe confirmed he would aim to 
build a future-oriented relationship as agreed on during the 
Japan-South Korea summit talks in October, noting: "I hope to see 
(both countries) further develop bilateral ties with a 
future-oriented approach." 
 
Afterwards, Foreign Minister Taro Aso, as well, met with Song at the 
 
TOKYO 00007163  004 OF 008 
 
 
Foreign Ministry's Iikura Guest House. On the six-party talks, Aso 
criticized North Korea's response this way: "It's regrettable that 
North Korea brought up the financial sanctions issue and refused to 
join the talks." The two foreign ministers confirmed that both 
countries would work together to steadily implement the joint 
statement released in September 2005 by the six-party talks. Prior 
to this meeting, the two exchanged instruments of ratification on 
the Treaty on Mutual Legal Assistance in Criminal Matters. 
 
6) Japan, China to release results of joint history study in 2008 
 
NIHON KEIZAI (Page 2) (Full) 
December 28, 2006 
 
Katsuhiko Iino, Beijing 
 
Japan and China wrapped up two days of talks in Beijing of the joint 
history study group that is charged with narrowing the perception 
gap between the two countries on history from an academic 
standpoint. The group concluded by deciding to aim for releasing the 
results of the study in 2008. The chair of the Japanese team, 
Shinichi Kitaoka, a professor at the University of Tokyo, commented 
favorably about the sessions at a press conference afterward: "The 
meetings were held in a serious, frank, and friendly atmosphere. We 
made a good start." 
 
The first round of meetings confirmed the policy line of holding the 
next round of the plenary session in March 2007, the third in 
December 2007, and the fourth in June 2008. It also decided to hold 
two subcommittee meetings on "ancient, medieval and modern history" 
and "contemporary history" on a timely basis. 
 
On the focal issue of "contemporary history," discussions will be 
held on "the prewar period," "the period from the Manchurian 
Incident to the end of WWII"; and "the 60 years after WWII," 
respectively. Kitaoka, however, commented that "nothing has yet been 
decided" about what form the final conclusions would take. 
 
7) Administrative Reform Minister Sata resigns to take 
responsibility for inappropriate accounting of political 
contributions 
 
SANKEI (Top Play) (Full) 
December 28, 2006 
 
Genichiro Sata, 54, state minister in charge of regulatory reform, 
local revitalization and administrative reform, held a press 
conference last night at the Cabinet Office, in which he announced 
his resignation after admitting one of his political support 
organizations engaged in inappropriate accounting of reported 
political funds. Prime Minister Shinzo Abe accepted his resignation 
and then decided to appoint Senior Vice Cabinet Office Minister 
Yoshimi Watanabe, 54, to be Sata's replacement. Watanabe's 
appointment will be officially announced today. Abe made a quick 
decision in a bid to avoid adverse effects on deliberations at the 
regular Diet session to be convened in January and on next summer's 
House of Councillors election. However, the resignation of Sata, who 
was in charge of reform of the public servant system, just three 
months after assuming office, has given a severe blow to the Abe 
administration. 
 
In his press conference yesterday, Sata said: "I sincerely apologize 
 
TOKYO 00007163  005 OF 008 
 
 
for causing public misunderstanding and distrust due to media 
allegations about my political support organization." Although he 
stressed that the political funds reports did not include alleged 
expenses for an office that did not exist and political activities 
not carried out, he admitted that expenses for another political 
group were posted in the reports. He then stated: 
 
"I decided to step down from the post in order to keep the scandal 
from affecting deliberations on the fiscal 2007 state budget at the 
regular Diet session next year. I have no intention to give up my 
Diet seat." 
 
The political support organization in question was created in 1990 
and disbanded last month. It had an office in a Tokyo building for 
which there was no record of a lease. The support group submitted to 
the government political fund reports from 1990 to 2000 claiming 78 
million yen for utilities and rent. 
 
Since the scandal came up soon after the resignation of Tax 
Commission Chairman Masaaki Honma, who also was appointed by the 
prime minister, the government has suffered serious political 
damage. Opposition parties, including Minshuto (Democratic Party of 
Japan), intend to pursue Abe's responsibility for appointing the 
two. A senior New Komeito member expressed concern, saying, "The 
public support rate may drop even more." 
 
Sata is now serving in his sixth term in the Lower House after being 
elected for the first time in 1990 from the former Gunma No. 1 
constituency. He belongs to the Tsushima faction in the LDP. He 
obtained a cabinet post for the first time after having served in 
such posts as senior vice minister of the Ministry of Internal 
Affairs and Communications, chief deputy secretary general of the 
LDP, Lower House Steering Committee chairman. 
 
Yoshimi Watanabe, Sata's successor, is the oldest son of late Michio 
Watanabe, one-time foreign minister. He is now serving in his fourth 
term in the Diet after being elected in 1996. He served in such 
party posts as director of the Land, Infrastructure and Transport 
Division and chief of secretariat of the Tax Research Commission. 
 
8) Resignation of Administrative Reform Minister Sata gives 
unexpected blow to Abe government 
 
SANKEI (Page 3) (Excerpts) 
December 28, 2006 
 
The Abe administration, which pledged to create a "beautiful 
country," is now suffering a serious setback in the resignation of 
Administrative Reform Minister Genichiro Sata just three months 
after assuming his post. There is no doubt that Prime Minister 
Shinzo Abe did not expect Sata would step down over the scandal 
involving money. Opposition parties will inevitably go on the 
offensive at the regular Diet session with an eye on next summer's 
Upper House election. Different from the resignation of Tax 
Commission Chairman Masaaki Honma, however, Abe approved of Sata's 
resignation only three days after the scandal was brought to light 
in an attempt to remove a worrisome issue in the government. 
 
Minshuto to call on Sata to resign from the Diet 
 
Opposition parties regard Sata's resignation as only natural. 
Minshuto (Democratic Party of Japan) plans to demand the resignation 
 
TOKYO 00007163  006 OF 008 
 
 
of Sata from the Diet, in addition to the opening of closed-hearing 
sessions of the Lower House Budget Committee during Diet recess. 
 
Minshuto Secretary General Yukio Hatoyama told reporters yesterday: 
"Just stepping down from the cabinet post is not enough. The prime 
minister must explain to the public after thoroughly investigating 
the scandal. This is what the prime minister must do at a minimum." 
 
9) Sata stops short of mentioning revenue sources for 78 million 
yen 
 
MAINICHI (Page 3) (Abridged) 
December 28, 2006 
 
It has been reported that a political organization under State 
Minister for Administrative Reform and Regional Revitalization Sata 
submitted political funds reports that recorded about 78 million yen 
in rent and utilities between 1990 and 2000 for offices for which it 
actually had no lease with the building operators. 
 
According to a government journal, Sata's political research group 
was established in 1990, when Sata was elected as a member of the 
House of Representatives for the first time. It set up an office in 
the Tokyo branch of Sata Construction Co., based in Maebashi and 
managed by his father. It claimed about 78 million yen for office 
rent and utilities during the period from 1990 to 2000. The group 
submitted a notice of dissolution this October. 
 
In a press conference yesterday, Sata said that the group held 
lecture meetings (in the Tokyo Branch), and he said, "The group paid 
office rent and utilities properly." But he stopped short of 
mentioning where the money came from. 
 
10) Minister Sata quits in scandal over political funds 
 
ASAHI (Page 31) (Excerpts) 
December 28, 2006 
 
Genichiro Sata, state minister for administrative reform and 
regional revitalization, was forced to resign from his post 
following the discovery of his political organization's 
inappropriate accounting records. In a press conference yesterday, 
Sata said, "There were no fictitious office expenses," but when 
asked for a specific explanation, he only replied, "I cannot reveal 
everything." 
 
Commentaries 
 
By Yasunobu Iwai, Nihon University professor: It is fully a crime 
 
Although he said, "There were no fictitious expenses," entering 
falsified expenses in income and expenditure reports is fully a 
crime. If such an act goes unchallenged, the political fund 
reporting system will become meaningless. The matter is not settled 
just by his resigning, for Sata, as a politician, is still held 
accountable. 
 
Politicians must examine their political fund reports on their own 
responsibility. There may be many politicians who are interested in 
income but lax about examining expenditures. One idea might be to 
have all political fund reports be listed on the Internet, so that 
the public would have the opportunity to scrutinize them. It is also 
 
TOKYO 00007163  007 OF 008 
 
 
necessary for all receipts to be attached to the reports. 
 
By Takashi Uesugi, former secretary of a Lower House member and 
journalist: Prime Minister's was too lax in his perception 
 
The resignation of Sata came quickly, probably stemming from a 
desire to minimize damage (to the government). But the prime 
minister holds a heavy responsibility for appointing someone with a 
problem. 
 
The Koizumi administration lasted for five years and a half, but 
there was no one who resigned over a scandal, because that 
administration had checked before appointing them to see if 
candidates were involved in any scandal. Mr. Abe followed Mr. 
Koizumi's method of trying to win over to his views one person at a 
time, but his aides probably had no capability to check. Prime 
Minister Abe also was too lax in his perception, I think. 
 
The first regular Diet session will be held next month. The case may 
adversely effect deliberations on the budget. 
 
11) Opposition parties to toughen attack following the resignation 
of Administrative Reform Minister Sata, summoning him as a Diet 
witness when the regular session opens early next month 
 
MAINICHI (Page 5) (Excerpt) 
December 28, 2006 
 
It was very painful for the Abe administration that Administrative 
Reform Minister Genichiro Sata was driven to resign over allegations 
of improper accounting of political funds by his support 
organization. Although Prime Minister Shinzo Abe aimed to quickly 
assuage the situation by settling the issue before the end of the 
year, the opposition parties, with next year's unified local 
elections and the Upper House election in mind, plan to strengthen 
their attack stance against the Abe government in the regular Diet 
session that opens early in the year. It appears that the outlook 
for the regular Diet session, which will deliberate the initial 
fiscal 2007 budget draft, the prime minister's first such 
experience, is likely to be tumultuous from the start. 
 
12) Government selects members for successor panel to regulatory 
reform conference 
 
ASAHI (Page 4) (Full) 
December 28, 2006 
 
The government decided yesterday to install 15 members, including 
Matsui Securities Co. President Michio Matsui, to the successor 
panel to the Regulatory Reform and Privatization Promotion Council, 
chaired by Nippon Yusen K.K. Chairman Takao Kusakari. The council is 
to expire at the end of March next year. The picked as members those 
who are eager to push ahead with regulatory reforms and also gave 
consideration to the need to promote the Abe administration's key 
policy measures, such as local revitalization. 
 
After the new panel is inaugurated in January, new members will be 
officially appointed. The government plans to integrate its Office 
of Trade Ombudsman (OTO) into the panel, because of overlapped 
themes for discussion at both committees. The government has so far 
come up with its three-month plan in March, but the new group will 
finalize its first report around June next year in order to reflect 
 
TOKYO 00007163  008 OF 008 
 
 
discussions there in the report. 
 
Prime Minister Abe said in a cabinet ministerial meeting on Dec. 
26: 
 
"The government will boldly scrap those regulations standing in the 
way of economic recovery, but there are some rules that are 
necessary to ensure the security of the people's livelihood. I hope 
those well versed in local circumstances will join (the new panel)." 
 
 
Some personnel selections reflect Prime Minister Abe's policy 
identity, like the selections of the president of a housing 
equipment manufacturer based in Shimonoseki, Yamaguchi Prefecture, 
and a standing director of a NPO Corporation supporting construction 
firms' advancement to the farm business. 
 
The new panel will include eight members of the current council, 
including Kusakari, who is scheduled to serve as chairman. 
 
DONOVAN