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UNCLAS SECTION 01 OF 10 TOKYO 004416 
 
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:  DAILY SUMMARY OF JAPANESE PRESS 09/21/07 
 
 
Index: 
 
(1) Long halt to refueling operations inevitable; Russia abstains 
from voting for UN resolution; Japan's UN maneuvering backfires 
 
(2) Editorial -- UN resolution a makeshift measure 
 
(3) Editorial: Ruling, opposition camps should compete on 
antiterrorism measures 
 
(4) US Army 1st Corps: Biggest HQ commanding 40,000 troops 
 
(5) Interview with US Deputy Secretary of State Negroponte: 
Expresses concern that Japan-US alliance will be undermined; 
Delisting of DPRK from state sponsors of terrorism "is unrelated to 
abduction issue  in narrow sense" 
 
(6) Direct foreign investment in Japan hit record in January-July 
period, but uncertainty looming over future 
 
(7) Banks in Saitama, Chiba used for money laundering; Westerners' 
trust in Japan might have been abused 
 
ARTICLES: 
 
(1) Long halt to refueling operations inevitable; Russia abstains 
from voting for UN resolution; Japan's UN maneuvering backfires 
 
ASAHI (Page 2) (Abridged slightly) 
September 21, 2007 
 
The UN Security Council's adoption of a resolution including an 
expression of appreciation for the Maritime Self-Defense Force's 
refueling operations would rock the Democratic Party of Japan's 
(Minshuto or DPJ) grounds to oppose a continuation of the refueling 
mission. So Japanese government intended with Resolution 1776, which 
was adopted by the UNSC on Sept. 19 (before dawn of Sept. 20, Japan 
time). Nevertheless, the DPJ's stance remains unchanged, and 
Russia's abstention from voting has exposed a lack of unity among 
the member countries. Although former Chief Cabinet Secretary Yasuo 
Fukuda and Liberal Democratic Party Secretary-General Aso Taro, who 
are vying for the LDP presidency to become the next prime minister, 
are eager to hold talks with the opposition parties, the 
Antiterrorism Special Measures Law is certain to expire on Nov. 1, 
forcing the government to suspend the refueling operations for a 
long time. 
 
The MSDF has been refueling the vessels engaged in the maritime 
interdiction operation (MIO) in the Indian Ocean to prevent the 
influx of weaponry and other materials. The MIO is part of the 
US-led Operation Enduring Freedom (OEF) against terrorism. 
Attributing the DPJ's adamant opposition to an extension of the 
Indian Ocean mission to the lack of a UN resolution clearly 
authorizing OEF, the Foreign Ministry began making behind-the-scenes 
moves early. 
 
A senior Foreign Ministry official said: "Starting in late August, 
we informally asked some permanent UNSC member countries (United 
States, Britain, and France) ways to adopt a new UN resolution 
referring to OEF." As a result, they came up with an idea of adding 
an expression of appreciation for the MIO to a resolution extending 
the International Security Assistance Force (ISAF) in Afghanistan. 
 
TOKYO 00004416  002 OF 010 
 
 
Specifically their idea was to include the words of appreciation for 
OEF in the preface to the resolution instead of its body. 
 
Foreign Minister Nobutaka Machimura told the Kantei (Prime 
Minister's Official Residence) that a new UN resolution would be a 
powerful tool to persuade the DPJ. Machimura also sought the 
cooperation of Secretary of State Condoleezza Rice at a Japan-US 
ministerial held in Sydney on Sept. 7. 
 
Given the fact that all UN resolutions on the ISAF had been adopted 
by a unanimous vote, a senior Foreign Ministry official was 
confident that China and Russia would support the new antiterrorism 
resolution. 
 
Contrary to the Foreign Ministry's expectations, Russia abstained 
from voting. "I don't understand why the resolution has to refer to 
the MIO," Russian UN Ambassador Vitaly Chrkin complained to his US 
counterpart before the vote. In response, the US ambassador 
explained that each member of the coalition of willing had their own 
circumstances. Hearing this, Chrkin said: "I hear that a request has 
come from a certain country, which is not a UNSC member." Russia's 
indirect criticism of Japan silenced the US representative. 
 
A UN source also criticized Japan's conspicuous manipulation behind 
the UN resolution. 
 
In a press conference yesterday, DPJ Secretary General Yukio 
Hatoyama blasted the government and ruling parties: "It is 
deplorable that they used such a disgraceful approach in a bid to 
get our party's support for a continuation of the refueling 
mission." DPJ Deputy President Naoto Kan also declared: "The 
resolution will have no impact on our stance whatsoever." 
 
In their joint press conference held at the Foreign Correspondents' 
Club of Japan on Sept. 19, both Fukuda and Aso stressed their plans 
to hold talks with the DPJ to continue the MSDF refueling 
operations. 
 
The atmosphere in the government and ruling parties before Prime 
Minister Abe abruptly announced his resignation had been different, 
however. 
 
Following Abe's statement in Sydney that he would stake his job on 
it, the government and the ruling bloc started paving the way for 
limiting the MSDF activities to refueling and water-supply services. 
The ruling coalition even considered extending the ongoing Diet 
session substantially beyond Nov. 10 and adopting new legislation by 
using its two-thirds majority in the Lower House. 
 
Chances were that the new legislation would not clear the Diet 
before the Antiterrorism Law expires on Nov. 1 and Japan would have 
to halt the MSDF operations temporarily. The government and the 
ruling coalition also studied ways to let the MSDF vessels stand by 
at a port near the Indian Ocean to resume operations as soon as the 
new legislation was enacted. The night before Abe announced his 
resignation, government and ruling party executives, including Chief 
Cabinet Secretary Yosano and LDP Secretary General Aso, assembled at 
a Tokyo hotel to discuss Diet measures and other matters. 
 
But Abe's resignation announcement derailed their plans. The Diet is 
now stalled due to the LDP presidential race. The planned Diet 
interpellations will be delayed about 20 days because the new prime 
 
TOKYO 00004416  003 OF 010 
 
 
minister will have to deliver his policy address. All this 
considered, Diet deliberations on new legislation would not take 
place until mid-October. 
 
Fukuda's and Aso's repeated indications that they would avoid 
confrontation with the DPJ have also spread the observation in the 
government and ruling coalition that it is near impossible for the 
new legislation to obtain Diet approval in the remaining session and 
that the moment of truth will come in the next regular Diet session 
in January. 
 
Even if the legislation were carried over to the regular session, 
the Diet would have to discuss the budget bill first. A path to 
resuming the MSDF operations is not in sight at this point when 
Lower House dissolution is looming over the ruling coalition. 
 
An LDP Diet affairs officer lamented: "If this issue takes a toll on 
deliberations on the state budget, people will ask, 'Which is more 
important -- the Japanese economy or the Indian Ocean operations?' 
And that would make the next Lower House election even more 
difficult for us." 
 
(2) Editorial -- UN resolution a makeshift measure 
 
TOKYO SHIMBUN (Page 5) (Slightly abridged) 
September 21, 2007 
 
The United Nations adopted a resolution expressing appreciation for 
Japan's refueling operations in the Indian Ocean. Because this 
resolution came out abruptly as a result of Tokyo's pressure on the 
UN, we are worried that other countries that are in agony over the 
war on terror may regard the resolution as a makeshift measure. 
 
The resolution adopted by the UN Security Council (UNSC) is intended 
to approve an extension of the missions of the International 
Security Assistance Force (ISAF), an organization formed to help the 
new government of Afghanistan, which was established after the 
collapse of the Taliban regime. 
 
The main text of the resolution is brief and simply approves the 
extension, but the preamble to the resolution refers to the NATO's 
operations, as well as the need for Operation Enduring Freedom (OEF) 
led by US forces, and gives a sense of importance to the overall 
resolution. 
 
The resolution expresses appreciation this way: "We express our 
appreciation for countries participating either in the ISAF or OEF, 
including NATO's leadership and the maritime interdiction 
component." No specific country is mentioned in the resolution, but 
the passage "maritime interdiction component" is taken to mean 
"expressing thanks to Japan for its contribution," US Ambassador to 
the UN Khalilzad said. 
 
When it comes to the situation in Afghanistan, NATO's secretary 
general presented a situation report to the UN last month. The 
report recognized a certain level of achievements in dealing with 
armed insurgents in northern and central Afghanistan, but it noted 
that violent acts continued in the south of the country, and that 
the number of violent incidents doubled from the same period of last 
year. Tragic cases of abductions of an Italian journalist, and South 
Korean and German civilians are still fresh in our memories. 
 
 
TOKYO 00004416  004 OF 010 
 
 
Participating countries have their own circumstances in the face of 
deteriorating security in Afghanistan. Germany has sent some 3,500 
troops mainly to northern Afghanistan and lost 30 lives or so. The 
tide of opinion in Germany is calling for a withdrawal. Britain, 
Canada, and the Netherlands, which have all deployed their troops in 
the dangerous southern region of Afghanistan, have begun grumbling 
about other countries being unwilling to send their troops there. 
 
Japan has not taken part directly in the ISAF and instead it has 
continued the MSDF's refueling mission. In the latest Japan-US 
summit days before announcing his intention to step down, Prime 
Minister Shinzo Abe committed internationally to extend the 
Antiterrorism Special Measures Law, the legal basis for the 
refueling mission. But there is no prospect for the law to be 
extended because of the main opposition Democratic Party of Japan's 
(DPJ) oppositon. Given this domestic situation, it can be easily 
imagined that Tokyo strongly lobbied Washington and tried to obtain 
an international seal of approval for an extension of the refueling 
mission. 
 
Russian Ambassador to the UN Churkin abstained from voting on the 
resolution on the grounds that the maritime interdiction component 
was outside the UN operations. Churkin also blasted the resolution, 
criticizing it as prioritizing a certain country's domestic 
circumstances. 
 
The DPJ is reacting sharply to the resolution, insisting on the need 
for Japan to obtain proper approval of an extension of the refueling 
mission from the UN. Even some in the ruling coalition cast doubt on 
the resolution for giving the impression that it was adopted merely 
for formality's sake. Domestic debate on the extension issue might 
have become even more complicated all the more for the resolution. 
 
(3) Editorial: Ruling, opposition camps should compete on 
antiterrorism measures 
 
MAINICHI (Page 5) (Full) 
September 21, 2007 
 
The United Nations Security Council (UNSC) adopted a resolution 
extending the operations of the International Security Assistance 
Force (ISAF) in and around Afghanistan. The resolution also 
expressed the UNSC's appreciation for Operation Enduring Freedom 
(OEF), including the maritime interdiction operation, in which 
Japan's Maritime Self-Defense Force has participated by refueling 
and supplying water to foreign vessels. 
 
The main opposition Democratic Party of Japan (DPJ) has opposed an 
extension of the MDSF refueling operation in the Indian Ocean based 
on the Antiterrorism Special Measures Law. The DPJ insists that the 
MSDF mission is not based on a UNSC resolution. The government had 
lobbied the UNSC members to include a phrase expressing their 
appreciation for the refueling services in a bid to urge the DPJ to 
change its opposition to continuing the MSDF mission. Russia, 
however, abstained from voting, saying that the vote represented a 
decision to prioritize the domestic situation of certain countries. 
 
The DPJ has no intention of altering its opposition to the refueling 
operation since the UN resolution was adopted for the extension of 
the ISAF operations. The reality is that it is extremely difficult 
for the UN to authorize with a single resolution the OEF operations, 
which were begun by the US-led coalition of the willing based on the 
 
TOKYO 00004416  005 OF 010 
 
 
US right of self-defense. The resolution probably meant that the 
United Nations did not directly authorize the refueling operation, 
but the international community hoped the operation would be 
continued. 
 
DPJ President Ichiro Ozawa's basic position that the UN did not 
authorize it will be a major issue in the ongoing Diet session. 
Meanwhile, Japan needs a debate on what kind of decisions it should 
make when it is asked by the international community without any UN 
resolution. 
 
Moreover, it is also important to know how the international 
community sees Japan's services. Although Japan made financial 
contributions worth 13 billion dollars for the Gulf War 1in 1991, it 
was not appreciated internationally. Therefore, there is a view that 
the refueling operation, which was appreciated, is a moderate 
assistance measure. 
 
There are many points of contention on the MSDF operation. However, 
with no discussion conducted after the July House of Councillors 
election, the public does not have any means to determine whether 
they should agree or disagree. 
 
We wonder in what area in the Indian Ocean the MSDF has carried out 
its mission, what kind of activities it has conducted, and whether 
its mission has helped antiterrorism operations. 
 
Some have contended that fuel provided by the MSDF to a US aircraft 
carrier was used in the Iraq war. There may be US aircraft carriers 
engaging in both the Iraq and Afghan wars. Since the issue is 
related to the foundation of the refueling operation, the government 
should provide clear explanations to the public. 
 
Ozawa's view is that since the ISAF operation was authorized by the 
UN, Japan can participate in it. However, many politicians are 
cautious about dispatching the Self-Defense Forces (SDF) to the 
ISAF, whose missions carry considerable risks. Ozawa should make 
clear his view on that point. 
 
With Prime Minister Shinzo Abe's surprise announcement of his 
intention to resign, the Diet was forced to suspend the session. The 
outlook is that deliberations on the MSDF refueling services will be 
delayed to October or later. The government and ruling coalition 
have probably prepared for a suspension of the MSDF mission, which 
expires on Nov. 1. 
 
The government should under the new prime minister work on new 
legislation on the refueling activities and sit down and deliberate 
the legislation. The ruling and opposition camps should compete on 
antiterrorism measures, including ones for stabilizing the Afghan 
people's livelihoods. 
 
(4) US Army 1st Corps: Biggest HQ commanding 40,000 troops 
 
ASAHI (Kanagawa edition) (Page 34) (Full) 
September 19, 2007 
 
Seattle is home to the Seattle Mariners, a major league baseball 
team for which Ichiro Suzuki is playing. In the suburbs of Seattle, 
the US Army locates its Fort Lewis base, where its 1st Corps is 
headquartered. 
 
 
TOKYO 00004416  006 OF 010 
 
 
In a forest of tall coniferous trees was the gate to Ft. Lewis. At 
the gate, we boarded an official vehicle of the 1st Corps' public 
affairs division. In about 10 minutes, a three-story brick building 
came into view. The door had a crest reading "America's Corps." In 
the entrance hall, we were greeted by the pictures of successive 
commanders. 
 
The 1st Corps, also known as "I Corps," is one of the US Army's four 
mainstay commands. Its establishment dates back to 1918 during World 
War II. In World War II, I Corps fought the Imperial Japanese Army. 
After the war, I Corps stationed troops in Japan to occupy and 
govern the country. In 1981, I Corps moved its headquarters to the 
current location that commands a view of Mt. Rainier, which is 4,392 
meters high. 
 
I Corps covers the Asia-Pacific region, or half of the globe. Its 
scope ranges as far as India in the west, Alaska in the east, and 
Australia and New Zealand in the south. 
 
I Corps' headquarters reportedly commands about 20,000 active troops 
and about 20,000 reserves in the event of emergencies. The 
headquarters is currently staffed with about 500 personnel. About 
300 of them are expected to be moved in time to Camp Zama in 
Kanagawa Prefecture for its command headquarters. 
 
"I Corps is a historical corps with the largest number of 
decorations, and we are the largest of all battle commands in the 
United States," Lt. Col. McDorman, who is the public affairs officer 
at Ft. Lewis, said proudly. 
 
On Sept. 11, 2001, terrorists attacked the United States at its 
nerve centers. The attacks shocked Americans. Since then, Ft. Lewis 
has been used as a base for the US Army to launch attack 
operations. 
 
I Corps also has dispatched troops to Iraq or Afghanistan, which are 
outside its area. The US Army has sent out a total of approximately 
64,000 soldiers-including those under the command of I Corps-from 
Ft. Lewis to combat areas. US Army troops are mobilized there on 
Stryker armored vehicles, and they are now beginning to return home. 
However, the US Army still stations about 11,000 troops mainly in 
Iraq, according to the base spokesman. 
 
Soldiers are trained at Ft. Lewis before they are sent out. There 
are 67 firing or bombing ranges on base. In addition, there was a 
training site that reproduced an Iraqi street. 
 
Among those facilities was the Battle Command Training Center (BCTC) 
for computer-aided operational simulations. 
 
Training programs there were mostly for possible battles in Iraq or 
Afghanistan. "This is the Army's largest training facility for both 
commanding officers and noncommissioned officers," Mike Peppers, 
director of the BCTC, explained. 
 
The BCTC is made up of seven facilities. One of them is a facility 
that has an operations command training system for large 
contingents. The US government built this facility two years ago 
with an investment of 2.7 billion yen. The computer-aided system can 
simulate operations using data, such as Iraq's geographical 
features. Its data is always updated with information brought by US 
soldiers with them. There was also a system looking like an auto 
 
TOKYO 00004416  007 OF 010 
 
 
race simulator that can be seen at game arcades. 
 
There was another facility called the Mission Support Training 
Facility (MSTF), which looks like a gymnasium. Inside there were 
tents with a number of computers set up. A group of officers was 
training there for operational command on the screen. 
 
"Today, the US Army's command and control are all digitalized," a 
training chief said. 
 
Along with the US military's global transformation, the US Army 
plans to build a new facility with the US budget on the premises of 
Sagami Depot in the city of Sagamihara, Kanagawa Prefecture. The 
newly planned facility is believed to have functions similar to the 
BCTC's. 
 
"We're going to conduct joint drills with Japan at the facility to 
be built in Japan," Peppers said. "I don't think we can do all the 
training programs we're doing here," he went on. "But," he added, 
"the facility will be at the highest level like the one we have 
here." 
 
I Corps is currently headquartered on the US mainland to command 
forward-deployed troops. In the process of realigning the US 
military presence in Japan, I Corps will move its' command 
functionality to Camp Zama, a US military base in the city of Zama, 
Kanagawa Prefecture. The city is opposed to the planned relocation 
of I Corps' command to Zama, claiming that it will lead to the US 
military's permanent use of the base. However, the US military is 
preparing to move the command to Zama. We visited Ft. Lewis on the 
outskirts of Seattle to see I Corps as it really is. 
 
(5) Interview with US Deputy Secretary of State Negroponte: 
Expresses concern that Japan-US alliance will be undermined; 
Delisting of DPRK from state sponsors of terrorism "is unrelated to 
abduction issue  in narrow sense" 
 
NIKKEI (Page 3) (Full) 
September 21, 2007 
 
Tsuyoshi Sunohara 
 
SIPDIS 
 
In an interview with Nikkei, US Deputy Secretary of State John 
Negroponte in response to the question of whether Japan should 
continue its Maritime Self-Defense Force's refueling mission in the 
Indian Ocean indicated that continuing that mission is indispensable 
in order to "firmly uphold the Japan-US alliance, which is the 
cornerstone for America's East Asia policy." This remark may be 
intended to forestall the main opposition Democratic Party of 
Japan's (DPJ) President Ichiro Ozawa, who has declared his 
opposition to continuing the refueling operation. Behind the remark 
is concern that if the refueling issue drags on, it could affect the 
Japan-US alliance. 
 
"(Besides the United States), many other countries have 
participated. It is safe to say that it is a multinational force 
operation," Negroponte said. Speaking of the MSDF's refueling 
mission in the Indian Ocean, he reiterated, "There is a very good 
reason (for continuing the mission)," and expressed hope that a new 
government of Japan would make a decision on the matter as swiftly 
as possible. Negroponte stressed that the mission was based on an 
"international consensus." 
 
TOKYO 00004416  008 OF 010 
 
 
 
In reaction to Ozawa's opposition to continuing the refueling 
mission, many in the US government have taken the view that the 
refueling issue "must not be turned into a political football," as 
Ambassador to Japan Schieffer put it. Prime Minister Shinzo Abe's 
announcement of his intention to resign has caused a political 
vacuum in Japan, and as if to take advantage of that, the ruling and 
opposition parties are engaged in a political tug of war over the 
refueling issue. A growing concern in the US government at present 
is that Ozawa's insistence on halting the refueling mission "could 
lead to a worsening of Japanese sentiment toward the US." 
 
Gaps are widening between Japan and the US over how to deal with the 
North Korean issues, particularly that of Japanese nationals 
abducted to North Korea. Negroponte proclaimed: "Japan and the US 
share the common cause of denuclearizing the Korean Peninsula. We 
have pursued policy cooperation." 
 
When asked whether the US would remove North Korea from the list of 
state sponsors of terrorism, Negroponte replied, "There is no 
deadline to do so," but he indicated that the US in deciding whether 
to delist that country, would take into consideration whether there 
was progress on dismantling the nuclear facilities, but not link the 
settlement of the abduction issue. He explained, "We don't think 
that (delisting and progress on the abduction issue) are related to 
each other in the narrow sense." Behind the question of delisting 
seems to be the Bush administration's intention to produce "results" 
in some way or other regarding the North Korean problem, 
 
Recently, however, the North has faced the allegation that it might 
have offered nuclear technology assistance to Syria. In this regard 
a former high-level State Department official commented: "If such 
were true, it would devastate the six-party talks process, as well 
as the conciliatory line of the US and the DPRK." 
 
Chances are strong that this assistance is "not the one for the 
transfer of nuclear bombs or nuclear materials but it is limited to 
the offering of information about relevant technology," as a source 
familiar with US-North Korea relations put it. Referring to this 
allegation, Negroponte went no further than to say, "I refrain from 
making any comment on relations between Syria and North Korea," and 
indicated his intention to minimize an adverse effect of the nuclear 
assistance issue on the six-party talks. The US government's 
conciliatory policy toward North Korea seems to be coming to a 
crossroads. 
 
(6) Direct foreign investment in Japan hit record in January-July 
period, but uncertainty looming over future 
 
NIKKEI (Page 5) (Full) 
September 21, 2007 
 
Foreign direct investment (FDI) in Japan, including foreign 
capital's investment in or acquisitions of Japanese firms, has 
skyrocketed recently. According to data released by the Finance 
Ministry, FDI in the January-July period of this year surged to a 
record high of 2.324 trillion yen, owing to an increase in the 
number of Japanese firms that sold affiliated companies to foreign 
firms as part of restructuring efforts, as well as the number of 
foreign firms that purchased equity stakes in Japanese firms. But 
the effect of the subprime loan problem in the US may dampen 
investment in the future. In addition, the ratio of FDI to gross 
 
TOKYO 00004416  009 OF 010 
 
 
domestic product (GDP) remains low. Keeping these factors in mind, 
many observers reiterate the need for more measures to promote 
investment as part of efforts to revitalize the economy. 
 
Capital inflows in the January-July period reached 4.648 trillion 
yen, while capital outflows totaled 2.288 trillion yen. The net 
figure of excess inflow over outflow was the largest ever for a 
January-July period since the Finance Ministry introduced its 
current calculation method in 1996, easily surpassing the annual net 
inflow record of 1.4513 trillion yen set in 1999. 
 
Last year, the value of outflow was 756.6 billion yen larger than 
the value of inflow, but this trend lasted only briefly. 
 
The increase in FDI reflects active moves among American and 
European companies to expand their global shares by acquiring 
Japanese firms. In a bid to boost their global competitiveness, more 
Japanese companies have entered into strategic business or capital 
tie-ups with foreign firms. This is another reason for the FDI 
increase. 
 
According to M&A intermediary Recof Corp., US giant Citigroup Inc.'s 
acquisition of Nikko Cordial Corp. (for 920 billion yen) was the 
biggest investment deal in the first half of the year, followed by 
General Electric Co.'s buyout of Sanyo Electric Credit Co. Many 
deals involve financially troubled companies. 
 
Direct foreign investment in August was also brisk. According to 
Recof Corp., the number of deals total 25, worth 105.2 billion yen, 
exceeding the value set in July. This record was due to the purchase 
of Yayoi Co., under the wings of Livedoor Co., by MBR Partners, an 
independent investment fund operating mainly in South Korea. 
 
The government has set the goal of doubling the ratio of the FDI 
balance to GDP in 2010 to 5 PERCENT  over the 2.5 PERCENT  marked at 
the end of 2006. Japan's FDI balance is lower than those of major 
Western countries. According to the United Nations Conference on 
Trade and Development (UNCTAD), the FDI balance in 2006 was 37 
PERCENT  in Britain, 18 PERCENT  in Germany, 13 PERCENT  in the US, 
but only 2 PERCENT  in Japan. 
 
It is unknown whether the current trend of expansion will continue 
into the future. In the aftermath of the turmoil in the monetary 
market set off by the subprime problem, global financial 
institutions are becoming cautious about money lending for M&A 
plans. 
 
A spokesman of Thomson Financial, an American financial information 
company, said that the number of M&A cases across the world in 
August decreased by 22 PERCENT  below the previous month to 2,709. 
Economist Makoto Tanimura of the Japan External Trade Organization 
(JETRO) said: "This global trend might have some effect on 
investments in Japan." Many persons are now calling for more efforts 
to arrange the environment to encourage investment, such as 
deregulation. 
 
(7) Banks in Saitama, Chiba used for money laundering; Westerners' 
trust in Japan might have been abused 
 
ASAHI (Page 39) (Full) 
September 20, 2007 
 
 
TOKYO 00004416  010 OF 010 
 
 
Why was Japan used as the stage for money laundering? A senior 
officer of the National Police Agency replied to this question: 
"Americans and Europeans tend to have no suspicion if Japan is 
designated as the payee. In addition, there might have been 
cooperators who opened bank accounts." In the US, when one transfers 
money abroad, a stringent background check is conducted on the 
sender. In this case, however, there was no investigation, because 
the senders were the victims of real estate swindles. 
 
As measures to eradicate the financial resources of terrorists and 
to prevent money laundering, the Japanese government introduced a 
stricter ID system for new depositors in 2003. Set off by the 
exposure of cases in which different persons' accounts were misused 
in bank-transfer scams, the government also prohibited the resale of 
bank accounts in late 2004. Despite these efforts, 1,558 cases of 
bank accounts illegally opened were unearthed in 2006. A flood of 
information about transactions in bank accounts is available on the 
Internet. As it stands, it is still easy to get different person's 
accounts. 
 
Under such a situation, wrongdoing never ceases. The number of 
allegedly crime-connected deals reported by financial institutes to 
the Financial Services Agency increased from 18,000 in 2002 to 
113,000 in 2006. The number of money-laundering cases prosecuted 
under the Organized Crime Law in 2006 totaled 134. 
 
Some point out the insufficiency of countermeasures in Japan, 
compared with the US. In April, the government enacted the law to 
prevent transferring money earned through crimes and set up a 
Japanese-version FIU (financial intelligence unit) in the National 
Police Agency. 
 
SCHIEFFER