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RUEHUL/AMEMBASSY SEOUL 6343
RUCNDT/USMISSION USUN NEW YORK 7110

UNCLAS SECTION 01 OF 11 TOKYO 005345 
 
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 11/27/07 
 
 
Index: 
 
(1) LDP Secretary General Ibuki: DPJ investigation likely mistaken 
about Nukaga attending party 
 
(2) Fukuda explicitly says that Finance Minister Nukaga will stay on 
in office 
 
(3) Iwakuni wavering over its rejection to USFJ realignment 4 
(4) US military firms in Japan, too 
 
(5) Yamada Corp. asked defense lobby for favors over discontinued 
contract 
 
(6) LDP's coordination of candidates for new Lower House election: 
North wind blowing against "Koizumi's children" 
 
(7) Prime minister puts on hold test-drilling of gas-fields in East 
China Sea, out of consideration to China 
 
(8) Matsushita to mass-produce consumer fuel cells next fiscal year 
as CO2 emission-cut measure 
 
(9) TOP HEADLINES 
 
(10) EDITORIALS 
 
ARTICLES: 
 
(1) LDP Secretary General Ibuki: DPJ investigation likely mistaken 
about Nukaga attending party 
 
YOMIURI ONLINE (Full) 
November 27, 2007 
 
The Liberal Democratic Party (LDP) this afternoon released the 
results of its own investigation of the allegation in testimony by 
former Vice Defense Minister Moriya that Finance Minister Nukaga 
attended a dinner party hosted by the former executive director of 
Yamada Corp., a trading firm specializing in aircraft and defense 
procurement. The statement concluded: "There is a high probability 
that the Democratic Party of Japan's (DPJ) investigation was 
mistaken." 
 
Prior to the release, LDP Secretary General Ibuki at a press 
conference this morning revealed the outline of the investigation. 
Regarding the evening of Dec. 4, 2006, which the DPJ indicated to be 
the date of the party, he explained that the party's investigation 
had found out: 1) Nukaga had a dinner meeting at a hotel that 
evening and took a group photograph with the date and time inserted 
on it; and 2) there was a recorded tape of the security-related 
study group meeting he attended after the dinner. Ibuki added: "No 
matter how you consider it, it is our sentiment that there would not 
have been any free time for Mr. Nukaga to have attended the meeting 
at the Japanese restaurant Hamadaya (as the DPJ asserted)." He took 
the view that most likely the DPJ was mistaken in its 
investigation. 
 
In addition, regarding the DPJ and other opposition parties' request 
that Nukaga be summoned as a sworn witness before the House of 
Councillors' Fiscal and Financial Affairs Committee, Ibuki stated: 
"Since the name of the person who presented (the DPJ) with the 
 
TOKYO 00005345  002 OF 011 
 
 
information that (Mr. Nukaga) was present at the dinner party that 
day is unclear, it would lead to invalid questions being asked (in 
the committee hearing)." He asked the DPJ to disclose proof that 
Nukaga was indeed at the dinner party. 
 
(2) Fukuda explicitly says that Finance Minister Nukaga will stay on 
in office 
 
SANKEI (Page 3) (Abridged slightly) 
November 27, 2007 
 
LDP fights back, saying that Nukaga has "alibi" 
 
Allegations have surfaced that Finance Minister Fukushiro Nukaga had 
attended a dinner party along with former Administrative 
Vice-Defense Minister Takemasa Moriya and others. Prime Minister 
Yasuo Fukuda indicated in yesterday's House of Councillors plenary 
session that his presence at the dinner did not pose any problem, 
saying, "He has politely explained the matter at press conferences 
and committee meetings," adding, "I want Mr. Nukaga to continue 
making utmost efforts to compile the fiscal 2008 budget." 
 
Nukaga, too, dismissed the suspicion at the plenary session, saying: 
"Although I have exchanged words with corporate executives at a New 
Year's party held by Keidanren (Japan Federation of Economic 
Organizations) and other occasions during my tenure as Defense 
Agency chief, I have never given anyone a special favor." 
 
Chief Cabinet Secretary Nobutaka Machimura also told a press 
conference yesterday afternoon: "I believe Mr. Nukaga has explained 
matters correctly based on facts. Are there any concrete grounds for 
the allegations?" 
 
Meanwhile, opposition party Diet affairs chiefs met yesterday in the 
Diet building and decided to demand that Nukaga and Moriya testify 
under oath before the Upper House Financial Affairs Committee. At a 
meeting of directors of the Upper House Financial Affairs Committee 
that followed, the opposition camp sought testimonies by Nukaga and 
others, but the ruling block rejected it. The two camps are now 
scheduled to discuss the matter on Nov. 27. 
 
LDP leadership thinks groundless accusation will turn into another 
"e-mail fiasco" 
 
Following Prime Minister Fukuda's clear indication to retain Nukaga, 
the Liberal Democratic Party has staged a fight-back. 
 
The LDP leadership has reportedly obtained hard evidence to prove 
that Nukaga was not present at the dinner. A senior LDP member 
wishfully said: "This is going to be another fake email fiasco 
involving former Democratic Party of Japan lawmaker Hisayasu Nagata, 
who lost his Diet seat because of it." Contrary to such a comment, 
LDP lawmakers seem highly irritated by the Nukaga problem. Unable to 
dispel suspicions, Nukaga now finds himself in a storm of criticism 
from within the party. 
 
LDP Secretary General Bunmei Ibuki received on Nov. 25 a telephone 
call from Nukaga from the city of Akita. Visibly frustrated, Ibuki 
told the finance minister: "If you have hard evidence, you should 
say so at places like a press conference. You should consult with 
Diet Affairs Committee Chairman (Tadamori) Oshima." 
 
 
TOKYO 00005345  003 OF 011 
 
 
Allegations have emerged that Nukaga was present, along with Moriya 
and Motonobu Miyazaki, a former managing director of defense 
equipment trading house Yamada Corp., at a dinner party held on 
December 4, 2006, at the Hamadaya Japanese restaurant in Tokyo's 
Ningyocho district in honor of former US Department of Defense Japan 
Division Director James Auer. The DPJ grilled Nukaga by even 
producing the dinner seating arrangement. 
 
Nukaga has repeatedly brushed aside the allegations by simply 
saying: "There is no evidence (that I attended the dinner party). I 
have no recollection of it, either." Unable to remain silent 
observers, Ibuki and others seem to have concluded that the matter 
could no longer be left to Nukaga alone. 
 
The Nukaga issue cropped up in a government and ruling coalition 
liaison meeting held yesterday noon, with prime ministerial aides 
also calling for speedy measures. Nukaga reportedly presented the 
LDP leadership with evidence proving that he was attending a 
different study meeting that day. 
 
Following this, LDP Senior Deputy Secretary General Hiroyuki Hosoda 
told a press conference yesterday: "(The DPJ) must restore Mr. 
Nukaga's honor by correcting false information and statements that 
went too far." Ibuki, too, applied pressure on the opposition camp, 
saying, "Persons who posed the wrong questions must be summoned to 
testify at the Diet." 
 
Nukaga quit as Defense Agency chief in 1998 to take responsibility 
for a scandal involving breach of trust cases against the agency and 
as state minister in charge of economic and fiscal affairs in 2001 
in the wake of allegations regarding his receipt of money from 
mutual aid foundation KSD. Aware of such background of Nukaga, some 
in the ruling camp are voicing concern if he can get through 
deliberations on the fiscal 2008 budget as finance minister. 
 
DPJ eyes Nukaga's sworn testimony to settle the matter 
 
In the face of the LDP's enhanced efforts to turn around the 
situation, the DPJ has not given the slightest indication of 
relaxing its pursuit of the Nukaga case. In yesterday's meeting of 
the Diet affairs chiefs of four opposition parties, the DPJ proposed 
sworn testimonies by Nukaga and Moriya before the Upper House 
Financial Affairs Committee. 
 
DPJ President Ichiro Ozawa yesterday took this view in the city of 
Nagasaki: "(Mr. Nukaga) is in a position to formulate the budget as 
finance minister. If he has nothing to hide, he should say so fairly 
and squarely." Deputy President Naoto Kan, too, cynically said in 
the city of Maebashi: "We would like to see Mr. Nukaga dispel 
suspicions through his Diet testimony. We will be happy to provide 
him with a chance to do so." 
 
The DPJ, however, has yet to produce any conclusive evidence that 
Nukaga attended the dinner party on December 4, 2006. 
 
Former DPJ Lower House member Hisayasu Nagata last spring brought up 
a bogus email at the Diet based on uncertain information which 
eventually cost him and Seiji Maehara a Diet seat and DPJ 
presidency, respectively. 
 
In yesterday's meeting of Diet affairs chiefs of the opposition 
parties, there was a scene where members of other parties asked the 
 
TOKYO 00005345  004 OF 011 
 
 
DPJ representatives to make sure that the allegations are true. 
 
In response to the observation in the ruling bloc that the Nukaga 
case would escalate into another e-mail fiasco, DPJ Diet Affairs 
Committee Chairman Kenji Yamaoka defiantly said to reporters 
yesterday: "They lack awareness. We are asking for 'yes' or 'no' to 
our proposal for Diet testimony (by Nukaga). The nature is totally 
different." 
 
(3) Iwakuni wavering over its rejection to USFJ realignment 
 
ASAHI (Page 37) (Abridged) 
November 23, 2007 
 
In the process of realigning US forces in Japan to mitigate 
Okinawa's burden of hosting US military bases, the government is 
urging base-hosting municipalities in the nation to accept more 
burdens with carrots and sticks. However, local base hosts are 
wavering over such a way of doing things. The city of Iwakuni in 
Yamaguchi Prefecture is opposed to the planned transfer of 
carrier-borne aircraft to Iwakuni base. Iwakuni is now constructing 
a new municipal government office building. Meanwhile, the 
government has stopped its subsidy for the city's new office 
building project. Consequently, the city's municipal administration 
is in turmoil. The government decided yesterday on incentives as 
carrots for localities accepting realignment plans. 
 
The city hall of Iwakuni is located in the downtown area. Right next 
to it, the city's new office building, which is covered with blue 
sheets, is under construction. The new office building is expected 
to be completed at the end of the current fiscal year. However, the 
city has yet to make up for the government's discontinued subsidy of 
3.5 billion yen for the current fiscal year. 
 
"We have cooperated with the base. However, the government has been 
too hard on us. We don't know why. The government is pushing for 
realignment with carrots and sticks. We can't agree to such a way of 
doing things." So saying, Iwakuni Mayor Katsusuke Ihara displayed 
bitterness in a press conference on Nov. 16. Earlier in that day, 
the city's municipal assembly met for an ad hoc session to take a 
fourth vote on the municipal government's budget plan to raise funds 
with special bonds for the city as a newly consolidated local public 
entity of municipalities, instead of counting on subsidies from the 
state coffers. The budget plan, however, was voted down. 
 
Iwakuni City's municipal assembly is dominated by those in favor of 
accepting carrier-borne aircraft to the base for the government's 
subsidy. In the city's assembly, pro- and anti-realignment members 
are squaring off. Mayor Ihara attended an office meeting on Nov. 20. 
On that occasion, he implied the possibility of resigning for a 
mayoral election. 
 
The turmoil was triggered by the government's interim report on the 
US military's realignment in Japan that came out in October 2005. 
The report announced a government plan to move 59 carrier-borne 
fighter jets from the US Navy's Atsugi Naval Air Station in Kanagawa 
Prefecture to the US Marine Corps' Iwakuni Air Station. After 
realignment, Iwakuni base will deploy a total of 120 warplanes, 
double its current deployment, and the base will be one of the 
largest US airbases in the Far East, as well as the US Air Force's 
Kadena base in Okinawa Prefecture. 
 
 
TOKYO 00005345  005 OF 011 
 
 
In March 2006, Mayor Ihara polled Iwakuni's residents on the 
government's plan to relocate carrier-borne fighters to Iwakuni. In 
that poll, nearly 90 PERCENT  of those who voted were against the 
government-proposed realignment plan. In response to this outcome, 
the mayor has carried through his stance against the transfer plan. 
 
Mayor Ihara was a Labor Ministry bureaucrat. In 1999, Ihara was 
elected to Iwakuni's mayorship before the city's consolidation with 
neighboring municipalities. Mayor Ihara has accepted the base's 
presence itself. In 2002, he accepted the transfer of eight 
heavy-lift helicopters from Hawaii. However, he is now in a position 
to say: "The relocation of carrier-borne aircraft to Iwakuni is on a 
large scale. It will impose a heavy burden on local residents, so 
it's unbearable." 
 
The work of constructing Iwakuni's new office building was started 
in September 2005 before the government's interim report was out. 
The cost of construction is 8.1 billion yen. The government decided 
to subsidize the construction project with a total of 4.9 billion 
yen. This subsidization was based on a Japan-US Special Action 
Committee (SACO) agreement of 1996. In 1997, Mayor Ihara's 
predecessor accepted the redeployment of aerial refueling aircraft 
from Futenma airfield in Okinawa to Iwakuni. The government then 
decided to subsidize Iwakuni in return for its consent to the 
transfer of tanker aircraft to Iwakuni. The city was subsidized with 
1.4 billion yen in fiscal 2005 and 2006. 
 
In May 2006, however, Japan and the United States finalized their 
talks over their plans to realign the US military presence in Japan, 
incorporating an agreement on tanker aircraft relocation. The 
government then called off its subsidization that was based on the 
SACO accord. Meanwhile, Iwakuni was still opposed to the transfer of 
air tankers to Iwakuni. In December 2006, the government notified 
Iwakuni of its decision to call off its remaining subsidy of 3.5 
billion yen for the final fiscal year. 
 
(4) US military firms in Japan, too 
 
AKAHATA (Page 1) (Full) 
November 22, 2007 
 
A US private-sector military firm has a contract to provide security 
for the US forces' missile-defense radar site at the Air 
Self-Defense Force's Shariki Base in the city of Tsugaru, Aomori 
Prefecture, sources revealed yesterday. In Iraq, US military 
companies carry out various security-related services for US 
military personnel stationed there. However, they also have caused 
serious problems in Iraq, such as killing or injuring civilians. The 
presence of US military firms in Japan is also being called into 
question. 
 
Chenega Blackwater Solutions is the US private-sector contractor 
that provides armed security guards to protect the US military radar 
site that houses the so-called "X-band radar." According to Tsugaru 
City officials who were briefed by the government, Chenega assigns 
about 60 personnel to the Shariki base. 
 
In June last year, X-band radar, a missile defense radar system 
designed to detect incoming ballistic missiles, was introduced to 
the Shariki base under an intergovernmental agreement reached 
between Japan and the United States connected to the realignment of 
US forces in Japan. According to the Oct. 7 issue of the Stars & 
 
TOKYO 00005345  006 OF 011 
 
 
Stripes, a US military newspaper, the X-band radar is operated by a 
detachment of about 100 personnel from the 94th Army Air and Missile 
Defense Command. The detachment has only two US military personnel. 
All the rest are from two US military contractors, Chenega 
Blackwater Solutions and Raytheon. 
 
Raytheon is a military company that develops and manufactures 
weapons like missile defense systems, and about 40 personnel from 
this company are operating the X-band radar. 
 
In Iraq, Blackwater USA, a US private security company contracted by 
the US Department of State to guard the US Embassy and provide other 
security services, shot 17 local civilians to death in September. 
The Iraqi government suspended this US military company's business 
license, and the US Congress held a public hearing. Private military 
firms are now under fire. 
 
Tsugaru City's municipal government explains that the Chenega 
 
SIPDIS 
personnel are "civilian employees." Japan has no primary 
jurisdiction over them even if they cause incidents or accidents on 
duty. That is because they are under the Japan-US Status of Forces 
Agreement, which grants privileges to members of the US Forces 
Japan. 
 
(5) Yamada Corp. asked defense lobby for favors over discontinued 
contract 
 
ASAHI (Page 39) (Abridged) 
November 27, 2007 
 
Yamada Corporation, a defense-related trading company based in 
Tokyo, asked the Japan-U.S. Center for Peace and Cultural Exchange, 
an incorporated body with influential defense-related lawmakers on 
its board of directors, around the summer of 2006 for favors over 
the discontinuation of a subcontract on processing the Imperial 
Japanese Army's poison gas. Naoki Akiyama, a permanent director of 
the center, is said to be a channel between Japanese and US war 
industries and political circles. Nichibei Bunka Shinkokai 
(Japan-U.S. Cultural Promotion Society), the center's predecessor, 
was also a contractor on the same undertaking. However, this 
contract is also being called into question. 
 
The Japan-U.S. Center for Peace and Cultural Exchange has former 
Defense Minister Fumio Kyuma and others on its board of directors. 
In the past, there were also Finance Minister Fukushiro Nukaga and 
Defense Minister Shigeru Ishiba. Meanwhile, the Tokyo District 
Public Prosecutors Office's task force has now arrested Notonobu 
Miyazaki, 69, a former managing director of Yamada Corp., for 
embezzlement and on some other charges. Miyazaki was also a director 
of the center until last year. In connection with Miyazaki's 
allegations, the task force searched the center's office and is now 
analyzing those seized from there. 
 
According to Defense Ministry and other sources, a seabed probe was 
conducted at the port of Kanda in the town of Kanda, Fukuoka 
Prefecture, for sea-route extension. At that time, the Imperial 
Japanese Army's gas shells were discovered there and those had to be 
removed for disposal. The first undertaking (in FY2004) and the 
second one (in FY2005) were entrusted to the then Defense Agency. 
The third undertaking in FY2006 and following projects were handed 
over to the Ministry of Land, Infrastructure and Transport. At 
present, the fourth project is going on. More than 1,200 shells were 
 
TOKYO 00005345  007 OF 011 
 
 
removed for disposal by FY2006. 
 
In November 2003, the then Defense Agency held open competitive 
bidding to start the projects. Yamada Corp., as an agent arranging 
for American divers for salvaging gas shells, became a subcontractor 
under a major steelmaker that became a contractor. However, the 
Defense Agency decided to contract a domestic diving company during 
the second project. Yamada Corp.'s subcontractor was discontinued. 
 
Yamada Corp., according to its sources, planned to take part in 
another project of that steelmaker to make up for its discontinued 
subcontract. Yamada Corp. then asked the center to recommend it to 
that maker. 
 
(6) LDP's coordination of candidates for new Lower House election: 
North wind blowing against "Koizumi's children" 
 
MAINICHI (Page 5) (Slightly abridged) 
November 27, 2007 
 
With an eye on a possible dissolution of the House of 
Representatives, the ruling Liberal Democratic Party (LDP) is now 
hurrying to coordinate its candidates for the next Lower House 
election. As Election Committee Chairman Makoto Koga and Vice 
Chairman Yoshihide Suga have set standards for selecting "winning 
candidates" and not giving special treatment to the so-called 
"Koizumi children," freshmen lawmakers who won their seats in the 
2005 Lower House election, the impact will adversely affect them. It 
is uncertain that those lawmakers, who were elected to the Lower 
House because their names were placed higher on the party's 
proportional representation list, will be given high rankings on the 
list for the next Lower House election. It is also difficult for 
those Koizumi children who won Lower House seats after being 
defeated in electoral district races to obtain official endorsements 
to run in constituencies in which the former postal rebels (now 
reinstated in the LDP) will run. One such lawmaker complained: "Are 
we now disposable candidates?" Former LDP Secretary General Tsutomu 
Takebe, regarded as a chief backer of the Koizumi children, said the 
following in a party hosted by lawmaker Kuniko Inoguchi on Nov. 20: 
 
"The LDP should set a slate for women also in the next Lower House 
election so that it will be easy for the party to gain voter 
understanding. In particular, former State Minister (in charge of 
declining birthrate) Inoguchi is one of those who were asked by the 
party leadership to run in the previous election." 
 
He played up the need for treating Koizumi children favorably by 
putting their names on the party's proportional representation list. 
Of the freshman lawmakers who ran only in the proportional 
representation segment in 2005, 14 were elected, and of those 
lawmakers, those who were given preferential treatment include: 
Inoguchi, whose name was put at top on the party's list of the 
proportional Tokyo bloc; Tadayoshi Nagashima, at the top on the 
North Shinetsu bloc list; and Mitsue Kondo, at the top of the Kinki 
bloc list. 
 
Suga noted on Nov. 25: "It is a big mistake if the Koizumi children 
have been campaigning, thinking that they will be given favorable 
treatment this time around as well." He took a negative stance 
toward giving them preferential treatment in the proportional 
representation segment. But it will be difficult for those freshman 
lawmakers whose names are placed lower on the list than in the 
 
TOKYO 00005345  008 OF 011 
 
 
previous election to hold on to their seats in the next election, 
even if they are allowed to run in the proportional representation 
segment alone. Senior Election Committee members have urged them to 
run in single-seat constituencies. The likelihood is that Taizo 
Sugimura, who was 35th on the South Kanto bloc list in the 2005 
election, will run in the Hokkaido No. 1 district; and Keisuke 
Suzuki, 34th in the South Kanto, will run in the Kanagawa No. 7 
district. Taku Otsuka, who was 29th on the proportional Tokyo bloc, 
is eager to run in the Tokyo No. 5 district. However, since the LDP 
won big in the previous Lower House election, there remain only 15 
single-seat districts in which there is still no LDP candidate. 
 
The LDP is having difficulties in coordinating candidates in four 
single-seat constituencies where "assassin" candidates who won Diet 
seats in the proportional representation segment after being 
defeated in district races, are pitted against postal rebels who 
rejoined the LDP after winning single-seat district races. The LDP's 
Gifu City chapter held a party on Nov. 23 in the Gifu No. 1 
district, in which Seiko Noda, a postal rebel who returned to the 
LDP, and Yukari Sato, will compete. Both Noda and Sato attended the 
party. Gifu City chapter chair Kazuhiro Tamaki sought to constrain 
the LDP headquarters' top-down decision, saying: 
 
"We cannot abandon one side (Sato) and help the other (Noda). If 
party headquarters urges (Sato to transfer to other district), it 
will be difficult for the LDP to secure a seat in the Gifu No. 1 
district." 
 
However, coordination in the prefectural chapter seems to be 
difficult. 
 
Suga indicated that the results of a poll by the LDP would become 
standards for coordination of candidates. He stated: "Both think 
they are the best choice. We should show them objective figures." 
According to the LDP's survey so far, the number of districts in 
which lawmakers rejoined the LDP, who are more popular and have 
stronger organizational power than Koizumi children, is larger than 
that of districts in which the freshman lawmakers are superior to 
former postal rebels. 
 
The former postal rebels, who rejoined the LDP, have gained 
confidence that the party will back them. Should the LDP enter the 
election split into two groups, the main opposition Democratic Party 
of Japan (DPJ or Minshuto) would be able to fish in troubled waters. 
To avoid this situation, the LDP executive will likely be forced to 
walk a tightrope in carrying out coordination of the candidates. 
 
(7) Prime minister puts on hold test-drilling of gas-fields in East 
China Sea, out of consideration to China 
 
SANKEI (Top Play) (Full) 
November 23, 2007 
 
The former Abe administration at one time decided to start 
negotiations to compensate fishermen for fishery losses, a 
precondition for starting test drilling to develop gas fields in the 
East China Sea. However, this policy decision was put on hold after 
the Fukuda cabinet was inaugurated. According to informed sources 
yesterday, the policy switch reflects the intention of the Prime 
Minister's Official Residence (Kantei). Japan and China have been at 
odds over where both sides should jointly develop and other details 
regarding gas field development. The Abe cabinet was determined to 
 
TOKYO 00005345  009 OF 011 
 
 
launch compensation negotiations in case there was no progress in 
Japan-China talks by this fall. 
 
Relevant government agencies started preparations for compensation 
negotiations. The policy change, in a sense, underscores Prime 
Minister Yasuo Fukuda's priority to relations with China. 
 
In their meeting in April, former Prime Minister Shinzo Abe and 
Chinese Premier Wen Jiabao agreed to come up with some specific 
measures by this fall to settle the ongoing dispute over joint 
gas-field development. However, a wide gap has been left unfilled 
between Japan, which insists that development should be near the 
Japan-China median line (an equa-distant line drawn between the 
shores of Japan and China, and China, which cites an area between 
the Japan-China median line and the Okinawa Trough (China-set 
boundary line). No progress has been made in bureau-director-level 
talks on gas-field development. 
 
The Abe cabinet had decided to launch compensation negotiations with 
parties that will be affected if test boring is carried out, such as 
fishermen in Nagasaki and Okinawa prefectures. The administration 
intended to demonstrate its strong determination by taking specific 
steps toward test drilling. 
 
The Fukuda cabinet, however, decided not to initiate negotiations 
for the time being, because it has to devote itself to domestic 
politics. The fate of such key bills as the new antiterrorism bill 
remain uncertain in the current political situation, in which the 
opposition bloc has control of the House of Councillors following 
the Liberal Democratic Party's crushing defeat in the July Upper 
House election. A government official was overheard saying: "The 
administration, which cannot afford to deal with diplomatic affairs, 
probably does not want to come up against China." 
 
China repeatedly said in the bureau-director-level talks that If 
Japan starts test boring, (the Chinese Navy) will dispatch a 
warship. Some observers see this threat behind the Fukuda cabinet's 
policy switch. 
 
It was found in May 2004 that China began constructing a mining 
facility called "Shirakaba or Chunxiao." Since then China 
constructed four test-drilling facilities near the median line. In 
reaction, then Minister of Economy, Trade and Industry Shoichi 
Nakagawa had granted concession rights to Teikoku Oil Co. in April 
¶2005. Later, though, his successor Toshiaki Nikai called a halt to 
this move. 
 
(8) Matsushita to mass-produce consumer fuel cells next fiscal year 
as CO2 emission-cut measure 
 
NIKKEI (Top Play) (Full) 
November 27, 2007 
 
Matsushita Electric Industrial Co. has decided to construct a plant 
in Shiga Prefecture to mass-produce fuel cells for household use. 
The company plans to begin operating the plant next fiscal year, 
with the aim of turning out 10,000 units a year by FY2010. Ebara 
Corp. and Toshiba Corp. are also planning to mass-produce fuel 
cells. Fuel cells are a highly effective next-generation power 
source with low carbon dioxide (CO2) emissions. A certain level of 
performance is required for the products to become more widely used. 
Now that the latest versions are close to this level, the government 
 
TOKYO 00005345  010 OF 011 
 
 
is looking into introducing a subsidy system. Given this, these 
companies have judged that putting the products on the market will 
become possible. The new technology that will contribute to 
significantly reducing CO2 emissions from households is likely to 
become widespread in the nation in a few years. 
 
Matsushita has been making fuel cells at a development facility in 
Moriguchi City, Osaka Prefecture, on a small scale. It now plans to 
build its first dedicated plant in Kusatsu City, Shiga Prefecture, 
at cost of 1-2 billion yen. This plant will initially produce 1,000 
to 2,000 units a year and will gradually increase capacity. Models 
using gas will be marketed by Tokyo Gas Co. 
 
Ebara will expand its Fujisawa plant in Fujisawa, Kanagawa 
Prefecture, to start in FY2008 producing 1,500 units compatible with 
either gas or kerosene. The company plans to raise capacity to 
10,000 units a year by FY2009. Toshiba Fuel Cell Power Systems Corp. 
based in Minato Ward, Tokyo, a subsidiary of Toshiba Corp., will 
finalize production plans within this fiscal year. Nippon Oil Corp. 
plans to buy up the fuel cell business of Sanyo Electric Co., as a 
step to start mass production. 
 
A life span of 40,000 hours (about 10 years of operation 10 hours a 
day) is considered a threshold for fuel cells to gain wide 
acceptance. Now that the latest versions are near this mark, these 
companies are preparing for mass production. 
 
The manufacturing cost is estimated at 4-5 million yen per unit, but 
the cost is expected to drop to about one million yen by 2010 owing 
to mass production, as well as shared specifications and parts. 
Manufacturers aim to lower the cost to 500,000 yen by 2015. 
 
The government has provided subsidies -- several million yen for 
each fuel cell installed at a house -- on a trial basis and has 
promoted verification tests. The government is also considering such 
incentive measures as offering subsidies or tax breaks for buyers in 
FY2009 and beyond. Makers expect such official subsidies will 
contribute to boosting sales. 
 
(9) TOP HEADLINES 
 
Asahi, Yomiuri: 
Former Vice Defense Minister Moriya to face criminal investigation 
probably this week 
 
Mainichi, Sankei: 
Prosecutors to question Moriya as early as this week 
 
Nikkei: 
Matsushita Electric to mass-produce fuel cells 
 
Tokyo Shimbun: 
Prosecutors eye indictment of Moriya on bribery charges 
 
Akahata: 
Government, ruling parties must heed the public's anger 
 
(10) EDITORIALS 
 
Asahi: 
(1) Gangland attacks must not be allowed 
(2) New Australian administration expected to break away from 
 
TOKYO 00005345  011 OF 011 
 
 
US-centered foreign policy 
 
Mainichi: 
(1) Expansion of mail delivery business and social mission 
inseparable 
(2) New breeze from new Australian government 
 
Yomiuri: 
(1) ROK presidential poll closely associated with Japan's security 
(2) Close cooperation between agriculture, commerce and industry 
essential for revitalizing local economies 
 
Nikkei: 
(1) Split conservative force and South Korean presidential race 
(2) Can the life insurance industry restore public trust? 
 
Sankei: 
(1) Association of the Families of Victims of Kidnapped by North 
Korea has new leader 
(2) Strategic cooperation with new Australian administration vital 
 
Tokyo Shimbun: 
(1) Progress expected through Middle East Peace conference 
(2) Opening juvenile trials requires careful study 
 
Akahata: 
(1) Article 9 must be kept intact 
 
SCHIEFFER