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UNCLAS SECTION 01 OF 09 TOKYO 004925 
 
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 10/22/07 
 
 
Index: 
 
(1) Gov't explanation collapsing due to suspicions over fuel 
supplying; US statement fails to show grounds for denial (Asahi) 
 
(2) US expects Japan to put end to diversion allegation involving 
MSDF fuel (Nikkei) 
 
(3) Former Defense Agency's bidding for chemical disposal technology 
delayed due to senior vice-foreign minister's pressure to adopt 
costly Foreign Ministry formula (Sankei) 
 
(4) Controversy over economic policy being reignited in LDP, with 
power shifting to lawmakers calling for fiscal reconstruction 
(Nikkei) 
 
(5) Government to launch resource diplomacy toward Africa, mulls yen 
loans to Angola (Sankei) 
 
(6) Hiroshima police to demand custody of 4 US servicemen over gang 
rape (Asahi) 
 
(7) Prime Minister's schedule, October 20 (Nikkei) 
 
(8) TOP HEADLINES 
 
(9) EDITORIALS 
 
ARTICLES: 
 
(1) Gov't explanation collapsing due to suspicions over fuel 
supplying; US statement fails to show grounds for denial 
 
ASAHI (Page 4) (Abridged) 
October 20, 2007 
 
The government's explanation about the suspected diversion of fuel 
provided by the Maritime Self-Defense Force to a US supply ship in 
the Indian Ocean is about to collapse. The government explained that 
the fuel was appropriately used in line with the purpose of the 
Antiterrorism Special Measures Law. On Oct. 18, the US Department of 
Defense released a statement denying the suspected diversion of 
MSDF-supplied fuel. However, the Pentagon owned up to the difficulty 
of tracking the use of MSDF-provided fuel, failing to show any 
clear-cut grounds to brush off the allegations. Meanwhile, it was 
also brought to light that former Administrative Vice Defense 
Minister Takemasa Moriya had often played golf with a defense 
contractor. The Diet is scheduled to start deliberations shortly on 
a new legislative measure for refueling assistance. However, the 
legislation's future course is growing even murkier. 
 
"The United States is the one and only ally (of Japan), and I take 
it for granted that we, on the government's part, should trust its 
statement." With this, Defense Minister Ishiba welcomed the 
Pentagon's statement in yesterday's news conference after a cabinet 
meeting. 
 
Despite that official comment, however, a senior official of the 
Foreign Ministry said the Pentagon statement was not substantial 
enough to tide over the Diet session. 
 
The Pentagon statement denied the suspected diversion of fuel, 
 
TOKYO 00004925  002 OF 009 
 
 
maintaining that the fuel was entirely consumed on Operation 
Enduring Freedom (OEF) in the war on terror. But the statement also 
said it was difficult to track the actual use of fuel. 
 
Fuel provided by Japan is mingled in a vessel's tank with fuel from 
other sources. In the case of indirect refueling from an MSDF supply 
ship through another supply ship, the Pentagon said it would be even 
more complicated to account for the use of such fuel. In addition, 
the Pentagon also admitted that US naval vessels may be engaged in 
multiple missions. 
 
The Pentagon, in its statement, underscored the complexity of 
tracking how fuel was used. What was then in the US side's mind? 
"They say fuel is mingled and their warships are engaged in multiple 
missions," a senior official of the Foreign Ministry said. "But," 
this official went on, "that's common sense in the military." The 
official added, "The statement shows US government irritation at the 
Japanese government's stance of asking it to provide information 
about each vessel's use of fuel." Another government official 
confessed, "This may provide ammunition for the opposition 
parties." 
 
The government is also wavering in its parliamentary replies over 
the suspected diversion of fuel. 
 
The USS Kitty Hawk, a US Navy aircraft carrier, was indirectly 
refueled with 675,000 gallons by the Tokiwa, an MSDF supply ship, 
through a US Navy supply ship. The Kitty Hawk was thereafter engaged 
in military operations against Iraq, so she is suspected of having 
used MSDF-supplied fuel for the Iraq operations. Defense Minister 
Ishiba, sitting in on the House of Representatives Budget Committee 
during its Oct. 10 meeting, denied this suspected diversion of 
MSDF-provided fuel. "The provided fuel was entirely consumed on OEF 
within a three-day timeframe," Ishiba stated before the committee. 
 
However, the leading opposition Democratic Party of Japan (Minshuto) 
pursued the government. The DPJ admitted that the Kitty Hawk might 
have burned 675,000 gallons in three days' time, but the DPJ also 
maintained that the MSDF-provided fuel was mingled in the Kitty 
Hawk's tank with fuel from other supply vessels. The DPJ therefore 
noted that it could not say the MSDF fuel was not used at all for 
the Iraq operations. On Oct. 11, Ishiba slightly retouched his 
previous reply, saying the Kitty Hawk "used up an amount of fuel 
that is equivalent to the amount of fuel provided by Japan." 
 
Meanwhile, the Defense Ministry looked into nearly 800 fuel supplies 
the MSDF has made over the past six years and inquired of the United 
States about those fuel supply cases. The United States, however, 
concluded that it would be difficult to find out how the MSDF fuel 
was used. 
 
(2) US expects Japan to put end to diversion allegation involving 
MSDF fuel 
 
NIKKEI (Page 3) (Excerpts) 
October 20, 2007 
 
Hiroshi Maruya, Washington 
 
The United States government issued, in short order, two statements 
that denied the allegation of diversion to the Iraq war of fuel 
provided by the Maritime Self-Defense Force (MSDF) in the Indian 
 
TOKYO 00004925  003 OF 009 
 
 
Ocean. The US will now call on the Japanese government to make 
efforts to enact the new legislation to extend the MSDF refueling 
mission. The US deems as its final reply the statements it compiled 
after detailed checking of the records in response to a request from 
the government and the ruling camp. 
 
US Ambassador visits Kantei 
 
US Ambassador to Japan Schieffer called on Prime Minister Yasuo 
Fukuda at his official residence (Kantei) yesterday and said: "We 
expect Japan will continue the MSDF refueling operation. To that 
end, we would like to offer cooperation as much as possible." The 
prime minister, however, indicated a possibility that the refueling 
mission might be suspended temporarily, saying: "Since we must 
establish a new law, the operation might be briefly suspended." 
 
The US has denied the allegation of diversion of MSDF-provided oil 
for use in the Iraq war. The ambassador categorically said to 
reporters after meeting with Fukuda: "None of Japan's fuel has gone 
to Iraq." However, it is indeed difficult to track how all the fuel 
was used. 
 
A statement issued by the Department of Defense on October 18 noted 
that we "believe" that MSDF-provided fuel was not used for other 
purposes than Operation Enduring Freedom (OEF) in Afghanistan. The 
statement thus denied the alleged diversion but also admitted the 
difficulty of tracking the use of all fuel. 
 
As the reason for the difficulty, the statement cited: "The fuel is 
not separated from other fuel and put in a different tank." Many 
observers see this response as natural in view of military common 
sense. 
 
To respond to inquiries from Japan about specific cases, the Defense 
Department investigated even past refueling cases. There was 
dissatisfaction in the government at a continuation of such work in 
the future. 
 
Possible effect on alliance 
 
The latest statement issued eight days after the first one includes 
comprehensive contents, indicating the US government's desire to put 
an end to the diversion issue. There reportedly is an atmosphere in 
the US Defense Department expecting Japan to enact the new law in 
return for the US' efforts to carry out the complicated work. The 
ball is now in Japan's court. 
 
(3) Former Defense Agency's bidding for chemical disposal technology 
delayed due to senior vice-foreign minister's pressure to adopt 
costly Foreign Ministry formula 
 
SANKEI (Top play) (Abridged slightly) 
October 22, 2007 
 
In 2003, then Defense Agency was in the process of determining a 
technology for disposing of the abandoned chemical weapons lying on 
the seafloor in Kanda Town, Fukuoka Prefecture. But the planned 
bidding for determining the method was delayed by one month due to 
intervention by the then senior vice foreign minister. Around that 
time, preparations were underway for a Foreign Ministry-led project 
to dispose of chemical weapons abandoned in China by the Imperial 
Japanese Army at the end of World War II. The trouble was triggered 
 
TOKYO 00004925  004 OF 009 
 
 
by the Defense Agency's attempt to adopt a technology different from 
that of the Foreign Ministry's project. A consulting firm engaged in 
the chemical disposal project in China was found to have received 
huge profits from official contracts by padding bills. Behind the 
scandal lies the opaqueness of the Chinese project that was far 
costly than the Japanese project. 
 
In October 2003, the Defense Agency Defense Operations Division, 
which was responsible for the planned competitive bidding for the 
Kanda Town chemical weapons disposal project, was troubled by 
repeated calls from a certain lawmaker that started about a month 
earlier. The caller came from then Senior Vice-Foreign Minister 
Tetsuro Yano, a House of Councillors member of the Liberal 
Democratic Party. 
 
On the phone, Yano always said: "It is absurd for the Defense Agency 
not to use the formula adopted in the chemical disposal project in 
China." Representing the Defense Agency, the bureau chief and other 
officials responsible for the project called on Yano to brief him on 
the agency's process, but the agency was eventually formed to 
postpone the tender. 
 
In order to disable old chemical weapons, ammunition must be 
dismantled, which can be done by means of: (1) heating blasts, (2) 
controlled blasts, (3) breaking up, or (4) cutting them up. 
 
In FY1999, a China chemical weapons disposal office was established 
in the Cabinet Office under the leadership of the Foreign Ministry. 
Research study was left mainly to the hands of the Japan Institute 
of International Affairs (JIIA) affiliated with the Foreign 
Ministry. In the spring of 2003, an agreement was reached with China 
on a plan to mainly use the heating blast method. Over 17 billion 
yen had been poured into this research study over a five-year 
period. 
 
Meanwhile, research and study on the Defense Agency-led Kanda Town 
project was commissioned to the Security Research Institute (Anzen 
Hosho Kenkyujo) through the open tender. As are result of field 
studies in five Western countries, three methods were proposed. In 
the summer of 2003, the Defense Agency drew up a plan to build a 
disposal plant using the controlled blast formula after hearing 
views at the evaluation committee composed of external experts and 
others. The Defense Agency's research and study cost came to less 
than 50 million yen. 
 
The research costs were 17 billion yen against and 50 million yen. 
An estimated 700,000 gas shells were buried in China against 580 
shells (later the estimation was increased to 4,000 shells) in Kanda 
Port. There were some other differences between the two sites, such 
where they were buried, underground or underwater. The lack of 
clarity of the budgetary steps taken by the Foreign Ministry were 
pointed out, even all those factors were taken into consideration. 
 
In his repeated telephone calls to the Defense Agency, Yano demanded 
an explanation, saying, "The conclusion was reached to use the 
heating blast formula through talks with the Chinese government. The 
Defense Agency should make a decision by respecting that 
conclusion." 
 
Troubled by Yano's calls, the Defense Agency asked a former Defense 
Agency Technical Research and Development Institute weapons expert, 
who was a member of the Kanda Port disposal project committee, to 
 
TOKYO 00004925  005 OF 009 
 
 
deal with the lawmaker. As a result, the Defense Agency was able to 
conduct the bidding without changing the plan in November that year, 
a month behind schedule, with the project awarded to Kobe Steel, 
Ltd. 
 
In disposing of chemical weapons, any method would require building 
a large plant resembling a nuclear reactor and the improvement of 
infrastructure, thereby drawing the keen attention of the defense 
industry. All companies came forward in collaboration with Western 
enterprises with their chemical disposal technologies. But in the 
end, Kobe Steel, which advocated the controlled blast formula, and 
JEE, which represented the heating blast method, were regarded as 
most promising. 
 
A Defense Agency source who was involved in the Kanda Port project 
explained the background of the delayed bidding this way: "The 
Foreign Ministry and JIIA that poured an enormous amount of money 
into research and study on Chinese project took the Defense Agency's 
conclusion with a small cost caused them to lose their face toward 
the Chinese government." 
 
The disposal project in China was handed from JIIA to the newly 
established Abandoned Chemical Weapons Disposal Corporation in April 
¶2006. Pacific Consultants International Group, a private-sector 
construction consulting firm, is now suspected of having swindled 
the government out of more than 100 million yen by padding bills for 
the chemical disposal project in China. 
 
(4) Controversy over economic policy being reignited in LDP, with 
power shifting to lawmakers calling for fiscal reconstruction 
 
NIKKEI (Page 2) (Full) 
October 19, 2007 
 
A dispute over the nation's tax and fiscal policies is being 
rekindled in the Liberal Democratic Party. Under the former Abe 
cabinet, former Secretary General Hidenao Nakagawa, who gives 
priority to economic growth, took the initiative. Under the Fukuda 
cabinet, however, lawmakers prioritizing fiscal reconstruction, 
including former Chief Cabinet Secretary Kaoru Yosano and Policy 
Research Council Chairman Sadakazu Tanigaki, are taking the lead in 
debate. Fearing that his policy advocacy might be rejected, Nakagawa 
has fiercely reacted. Discussion on economic policy is already 
heating up before the LDP's Tax System Research Commission starts 
deliberations on Oct. 25. 
 
In an interview with the Nikkei yesterday: Yosano said: "It is 
ridiculous to call for establishing a small government, which is 
like advocating a night watchman state." Taking up this remark, 
Nakagawa, a leader of the Machimura faction, assailed: "The idea of 
creating a small government is specified in the party's new 
platform. Calling it ridiculous might be taken as insulting the 
party." 
 
Under the Koizumi administration, Nakagawa served as Policy Research 
Council chairman, while Yosano was state minister in charge of 
economic and fiscal policy. When the Abe administration was 
launched, Nakagawa assumed real power for policy making. But under 
the Fukuda administration, the weight has been shifted from Nakagawa 
to Yosano, who now chairs the Fiscal Reform Research Council, and 
Tanigaki, who chairs the Policy Research Council. 
 
 
TOKYO 00004925  006 OF 009 
 
 
The presence of the Finance Ministry, which is eager to reconstruct 
the nation's financial system, can be detected behind moves by 
Yosano and Tanigaki. A senior economic official said: "Unlike the 
former Abe administration, which was unnecessarily hostile to the 
bureaucracy, the Fukuda cabinet seems to be willing to work in 
cooperation with government ministries." 
 
As if touched off by controversial remarks by Yosano and others, 
debate in the party has become animated. In a press conference 
yesterday, Chief Cabinet Secretary Nobutaka Machimura said: "Even if 
we use only sweet words, it is uncertain whether we will be able to 
win the next election," distancing himself from the 
Nakagawa-advocated policy of focusing on economic growth. 
 
Meanwhile, former Internal Affairs and Communications Minister Heizo 
Takenaka, close to Nakagawa, expressed a sense of alarm about the 
policy of focusing on tax increases as a means to reconstruct state 
finances. He said in an article carried in the Nikkei: "For 
financial reconstruction, there are two ways: a tax increase and 
economic growth. I am concerned that only views favoring tax hikes 
will be incorporated." 
 
With an eye on dissolution of the House of Representatives for a 
snap election, many are paying attention to whether a rise in the 
consumption tax and a timetable for the hike will be specified in an 
outline for tax system reform due out in December. Tax System 
Research Commission Chairman Yuji Tsushima, who chairs the Tsushima 
faction, only said in a general meeting of the faction: "We should 
not reach a conclusion in haste. We still have a blank state." 
 
(5) Government to launch resource diplomacy toward Africa, mulls yen 
loans to Angola 
 
SANKEI (Top Play) (Full) 
October 21, 2007 
 
The government decided yesterday to step up efforts to activate 
resource diplomacy toward Africa. It is mulling the possibility of 
offering yen loans for the first time to Angola, which abounds in 
such natural resources as oil and natural gas. The government also 
plans to resume yen loans to Madagascar, which is rich in nickel 
resources. To counter China's active resource diplomacy toward 
Africa through financial aid, Japan also aims to secure a stable 
procurement of natural resources lying idle in the region by 
expanding its assistance to Africa. The government plans to come up 
with specific assistance measures in a meeting of the Tokyo 
International Conference on African Development to be held in 
Yokohama next May under its sponsorship. 
 
The volume of daily oil production in Angola is about 1.4 million 
barrels (in 2006). International oil majors have joined the 
exploitation of oil there. Angola became a member of the 
Organization of Petroleum Exporting Countries (OPEC) this January, 
pushing up its status as an oil producer. 
 
Angola has improved its repayment capability as its economy is being 
headed toward growth owing to an increase in its oil income. Given 
this, Japan has begun looking into providing that nation with yen 
loans for the first time. Angola, however, is now engaged in 
negotiations with the so-called Paris Club of creditor nations on 
the issue of its debt repayment, so when prospects for a settlement 
in the negotiations are opened up, Japan intends to start offering 
 
TOKYO 00004925  007 OF 009 
 
 
yen loans to it. 
 
Japan has now suspended new yen loans to African countries because 
of their low ability to repay debts, but it will promote the process 
of resuming yen loans to such countries. In addition to Madagascar, 
Zambia, a copper-producing country, is being cited as eligible for 
Japan's yen loans. 
 
The government further has decided to distribute approximately 27 
billion yen in yen loans for a project to expand facilities at the 
port of Mombasa in Kenya. Mombasa Port is defined as an important 
point for goods distributions in the middle-eastern Africa. Japan 
believes the project will also contribute to facilitating the 
procurement of resources from its neighbors. Both sides will sign an 
agreement possibly next month. 
 
Against the backdrop of globally rising resource prices, a stably 
procurement of rare metals is becoming a major challenge for Japan. 
Reflecting the world paying attention to Africa as a potential 
region for resource development, an official of the Ministry of 
Economy, Trade and Industry said: "We would like to secure a stable 
procurement of natural resources by offering yen loans" to Africa. 
 
China is also steadily obtaining natural resources from Africa with 
"huge economic aid in disregard of international standards," 
according to a financial source. 
 
China held an international conference that brought together the 
leaders of 48 African countries in Beijing in November 2006 and 
pursued active resource diplomacy there. 
 
In the TICAD in Yokohama next May Under, Japan intends to come up 
with measures to assist Africa under its official development 
assistance (ODA) program in an effort to strengthen diplomatic and 
economic ties with African countries. 
 
(6) Hiroshima police to demand custody of 4 US servicemen over gang 
rape 
 
ASAHI (Page 39) (Full) 
October 20, 2007 
 
A woman was recently assaulted by a group in the city of Hiroshima. 
In this incident, Hiroshima prefectural police will obtain arrest 
warrants for four US servicemen stationed at the US Marine Corps' 
Iwakuni base in the city of Iwakuni, Yamaguchi Prefecture, on 
suspicion of gang raping her. After that, the Hiroshima police will 
ask US Forces Japan early next week to turn over the four under the 
Japan-US Status of Forces Agreement (SOFA). 
 
According to the investigation, the four US servicemen got to know a 
19-year-old female at a dance event at a hall for rent in Hiroshima 
City. The four US servicemen forced her into a car, and they drove 
to another parking lot about 2 km away, where they allegedly 
gang-raped her in the car at around 3:30 a.m. on Oct. 14. 
 
The police also found that the four US servicemen left the female in 
the parking lot and then drove to a restaurant in the city, where 
they brought about another assault incident. The Hiroshima police 
reported the incidents to USFJ. The four US servicemen were held by 
the US military as they returned to the base that day, the police 
said. 
 
TOKYO 00004925  008 OF 009 
 
 
 
The Iwakuni base's press division told the Asahi Shimbun yesterday 
that four Marines were in custody at the base in connection with the 
Hiroshima prefectural police's investigations. The base press 
division said it could not answer whether the base would turn over 
the four to Japanese police. 
 
SOFA stipulates the status of US military personnel stationed in 
Japan. In case US military personnel are in US military custody over 
their off-duty or off-base crimes, police authorities will seek 
arrest warrants for them and ask the US military through the 
government to turn them over to the Japanese police. 
 
Iwakuni Base is located in the city of Iwakuni. The city's mayor, 
Katsusuke Ihara, met the press yesterday. "If it's true, it's very 
regrettable," Ihara said when he met the press yesterday. This kind 
of incident "must not happen," the mayor added. Along with the 
realignment of US forces in Japan, the US military plans to move 59 
carrier-borne fighter jets and others from Atsugi Base in Kanagawa 
Prefecture to Iwakuni by 2014. After they are moved to Iwakuni, the 
number of military personnel and civilian employees at Iwakuni Base 
will increase to about 6,000, an increase of 50 PERCENT  over the 
base's present population. "If there is an increase in the number of 
(US military) personnel, there will be a much higher risk (of 
incidents)." With this, the mayor expressed his concern. 
 
 (7) Prime Minister's schedule, October 20 
 
NIKKEI (Page 2) (Full) 
October 21, 2007 
 
11:24 
Visited the Imperial Palace with his wife to celebrate the Empress's 
birthday. 
 
12:27 
Met with his secretaries at the Grand Prince Hotel Akasaka to make 
arrangements. 
 
15:38 
Returned to his private residence in Nozawa. 
 
Prime Minister's schedule, October 21 
 
NIKKEI (Page 2) (Full) 
October 22, 2007 
 
10:00 
Attended a ceremony in commemoration of the 125th anniversary of 
establishment of Waseda University at the university in Toyama. 
Former Prime Minister Kaifu and others also attended. 
 
12:12 
Returned to his private residence in Nozawa. 
 
(8) TOP HEADLINES 
 
Asahi, Mainichi, and Tokyo Shimbun: 
MSDF has been concealing fuel info error since 2003 
 
Yomiuri: 
PCI netted 120 million yen by padding bills 
 
TOKYO 00004925  009 OF 009 
 
 
 
Nikkei: 
Government, ruling camp to postpone plan to use gasoline tax revenue 
for general purposes 
 
Sankei: 
Senior vice foreign minister interfered in bidding for chemical 
weapons disposal project 
 
Akahata: 
Chairman Shii calls for earnest antiterrorism law debate in 
interview 
 
(9) EDITORIALS 
 
Asahi: 
(1) Prohibition of long tenure for local chiefs must be left to each 
municipality 
(2) Bloodshed in Pakistan results from war on terrorism 
 
Mainichi: 
(1) US holds key to global economy 
(2) Reform of civil servant system a test of prime minister 
 
Yomiuri: 
(1) Constitutional debate must move forward 
(2) Former Vice-Defense Minister Moriya's collusive ties to defense 
contractor intolerable 
 
Nikkei: 
(1) Simple and solid building authorization system necessary 
(2) EU becoming flexible with new treaties 
 
Sankei: 
(1) False campaign violation charges must be eliminated 
(2) Life-support treatment requires serious thought 
 
Tokyo Shimbun: 
(1) Rising food prices 
(2) Tax hike argument should go hand in hand with spending cuts 
 
Akahata: 
(1) Disaster victim assistance law must be revised to swiftly fund 
housing 
 
SCHIEFFER