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RUEHUL/AMEMBASSY SEOUL 6760
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UNCLAS SECTION 01 OF 10 TOKYO 005603

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 12/19/07

Index:
1) Top headlines
2) Editorials
3) Prime Minister´s daily schedule (Nikkei)
Defense and security issues:
4) Japan successfully intercepts missile in Hawaii test, but debate
over cost effectiveness of MD continues, with 1 trillion yen
allocated for system (Mainichi)
5) Government to change guidelines for emergency responses to allow
missile intercepts under prior-approval set up (Mainichi)
6) Antiterrorism bill to allow MSDF refueling mission to continue
expected to be finally rejected by the opposition-controlled Upper
House on Jan. 11 (Nikkei)
7) Former GSDF Samawah commander turned lawmaker makes pitch in
Upper House for adopting the antiterrorism special measures bill
(Yomiuri)
8) Agreement between U.S., Japan reached on host-nation support, but
issue of phasing out labor allowances for Japanese employees remains
(Yomiuri)
9) Differential pay to local employees remains as the sole issue in
the now settled host-nation support agreement (Nikkei)
Defense scandals:
10) Moriya to be re-arrested yet again as more bribe money
uncovered, but his wife released from jail (Mainichi)
11) Former Yamada Corp. exec Miyazaki, now under arrest, gave
"fixer" Akiyama 100 million yen to set up channels between Japan,
U.S. that he could tap (Mainichi)
12) Akiyama to be summoned to testify before the Diet as a sworn
witness (Mainichi)
13) LDP´s Taku Yamasaki sets up political subcommittee on the Korean
Peninsula, aiming at normalizing Japan´s relations with the DRPK
during Fukuda tenure (Sankei)
14) Chief Cabinet Secretary Machimura, who says he absolute believes
in UFOs, unhappy with government´s official view rejecting their
existence (Sankei)
DPJ election strategy:
15) Democratic Party of Japan (DPJ) to focus election strategy on
the urban voter, plans to run female candidate in Tokyo against
former defense chief Koike (Tokyo Shimbun)
16) DPJ expects to have 250 candidates lined up by early next year
to run in next Lower House election (Yomiuri)

Articles:
1) TOP HEADLINES
Asahi:
Wheat price to be raised again in April, likely to affect bread,
noodle prices
Mainichi:
Moriya rearrested over taking 3.64 million yen in bribes
Yomiuri:
Moriya served fresh arrest warrant for allegedly extending favors
for 7 types of defense equipment in return for 3.63 million yen in
TOKYO 00005603 002 OF 010
bribes
Nikkei:
Matsushita, Canon, Hitachi in talks to form alliance to build flat
TV panels
Sankei:
MSDF succeeds in missile intercept test, paving way for major role
in MD system; Constitutional review imperative
Tokyo Shimbun:
New students at nursing care schools drop 13 PERCENT
Akahata:
Hokuriku Electric Power Co. hides 8 active faults near Shiga nuclear
power plant

2) EDITORIALS
Asahi:
(1) Former Vice-Defense Minister Moriya rearrested
(2) Austerity essential in compiling supplementary budget
Mainichi:
(1) MD test: It is not a dream system yet
(2) Medical fees must be used to stop doctors from leaving
hospitals
Yomiuri:
(1) Moriya´s acceptance of cash must be condemned
(2) Medical-related budgets expose limits to automatic cuts
Nikkei:
(1) Economy needs close watch
(2) Lisbon treaty gives flexibility to EU
Sankei:
(1) Moriya rearrested: Shed light on possible involvement of
lawmakers
(2) Strengthened Japan-U.S. alliance expected to follow successful
Aegis missile test
Tokyo Shimbun:
(1) Moriya rearrested: MOD procurement system must be corrected
(2) Working conditions must be reviewed in order to stop declining
birthrate
Akahata:
Unidentified pension accounts issue requires greater efforts
3) Prime Minister´s Official Residence (Kantei)
Prime Minister´s schedule, December 18
08:11
Attended a private-sector/government executive council meeting on
promoting work/life balance. Later, attended a study meeting on
priority strategy for supporting children and families.
09:03
Attended a cabinet meeting in the Diet building. Later met Health,
Labor and Welfare Minister Masuzoe. Then met Education Minister
Tokai. Followed by New Komeito President Ota.
10:07
Met former Secretary General Nakagawa at the Kantei. Followed by
Resources and Energy Agency Director General Mochizuki and Deputy
Vice METI Minister Toyoda.
11:04
Met Lower House member Taku Eto. Later, LDP headquarters chief
Sakamoto, and others.
13:21
Met Deputy Chief Cabinet Secretary Futahashi.
15:14
Met Futahashi. Followed by Cabinet Intelligence Director Mitani.
16:01
Met Cabinet Office Vice Minister Uchida. Later, met Deputy Foreign
Minister Yabunaka and Asian and Oceanian Affairs Bureau Director
General Sasae.
17:02
Attended a ceremony to grant certifications for special reform
district plans, regional revitalization plans, and shopping district
revitalization plans. Later, attended a meeting of cabinet ministers
responsible for monthly economic reports.
18:10
Met New Komeito Policy Research Council Chairman Saito.
19:11
Returned to his private residence in Nozawa.

4) MD test successful: Cost effectiveness the next topic of
discussion

The Maritime Self-Defense Force successfully carried out a sea-based
Standard Missile 3 (SM-3) interceptor test off a U.S. Hawaiian
island. Japan has already deployed the ground-based Patriot Advanced
Capability 3 (PAC-3) interceptor system. The government will now
start operating Japan´s missile defense (MD) shield system
consisting of the SM-3 and the PAC-3. The government plans to lay
down a MD network throughout the country by fiscal 2012 in order to
deal with the threat of North Korea´s ballistic missiles. The total
cost of SM-3 and PAC-3 shielding, however, is estimated at 800
billion yen to 1 trillion yen. It will be even more costly to
introduce an advanced MD system of the next generation. This will
likely give rise to arguments for cost effectiveness due to the
country´s dire fiscal straits.

"I wonder if you can gauge the effectiveness of something or the
cost of saving the lives of people. You only say the price is so
high. That doesn´t hit the nail on the head, and you are thinking
with your heart rather than your head," quipped Defense Minister
Shigeru Ishiba, visibly upset in a press conference when asked about
the cost effectiveness of MD and aware that the high cost of
introducing an MD system has been a target of criticism.

Ishiba is concerned about the threat of North Korea´s ballistic
missiles. In 1998, North Korea launched a long-range Taepodong
ballistic missile that flew across over Japan. At the time, the then
Defense Agency had just started its study of an MD system. The
agency then geared up for its introduction.

According to the Defense Ministry, the budget for MD introduction
will peak at 186.3 billion yen in the current fiscal year, the
initial year of interceptor missile deployment. The MD budget for
the remaining fiscal years up to 2012 is estimated to be lower than
the current fiscal year´s budget, according to the Defense
Ministry.

Japan and the United States plan to co-develop an advanced SM-3
system of the next-generation type by fiscal 2014. The government
has yet to decide on whether to mass-produce the advanced MD system.
However, the government´s financial burden will skyrocket if the new
MD system is to be introduced. The interceptor missile fired off
Hawaii was imported from the United States for approximately 2
billion yen. A domestic defense-related business also says, "The MD
budget is huge, but there´s no merit for us. It doesn´t have a
future-oriented aspect to it."

5) Prior intercept order eyed for SDF counteraction

The Maritime Self-Defense Force successfully shot down a projectile
in its test-firing of a sea-based Standard Missile 3 (SM-3)
interceptor, and the SM-3 will go operational early next month.
Ahead of SM-3 deployment, the government decided yesterday to revise
its emergency action guidelines for missile defense (MD) operation.
The government will revise the MD guidelines for the ground-based
Patriot Advanced Capability 3 (PAC-3) interceptor system, which was
first deployed in March. If and when a foreign country prepares to
launch ballistic missiles, the defense minister will be allowed to
order the Self-Defense Forces in advance to intercept ballistic
missiles with the SM-3. The ruling Liberal Democratic Party will
hold a joint meeting of its defense-related divisions today to
approve revising the MD guidelines. The government will shortly make
a cabinet decision on this matter.

6) DPJ executive predicts that new refueling bill will be voted down
in Upper House on Jan. 11

A senior member of the major opposition Democratic Party of Japan
(DPJ or Minshuto) indicated yesterday that the bill to resume the
refueling operation in the Indian Ocean would be voted down in a
House of Councillors plenary session on January 11. After New Year´s
break, the Upper House Foreign Affairs and Defense Committee is
scheduled to meet on Jan. 8 and 10. The senior DPJ member indicated
that chances are high for the committee´s adoption of the bill on
Jan. 10 and the plenary session´s vote on Jan. 11, saying, "We will
work hard until the last moment." If a vote is not taken on Jan. 11,
60 days will have passed on Jan. 12 since the legislation was sent
from the House of Representatives, allowing the ruling camp to
regard the Upper House´s inaction as de facto rejection under the
Constitution.

7) "Mustached commander" appeals to public

"People don´t know very much about the new antiterror legislation´s
significance and importance."

On Dec. 18, the House of Councillors Foreign Affairs and Defense
Committee met. Masahisa Sato, a House of Councillors member of the
ruling Liberal Democratic Party, expressed his view before the
committee. Committee members present in the room were straightened
up when the committee meeting was in a mood to wind up.

Sato headed an advance team of the Self-Defense Forces to Iraq, and
he is known as the "mustached commander." The LDP yesterday set up a
corner on the Japanese version of YouTube. On it, Sato explains the
new antiterror legislation as an SDF-member-turned lawmaker. He also
visits various places in the country to speak on the legislation. He
seems to be most directly feeling the public´s lack of understanding
on the legislation.

In the committee meeting, Sato talked about his visits to Niigata,
Hokkaido, and Fukushima for three days from Dec. 15. He stated: "I
explained the bill´s significance. One person said, ´Oh, is that so?
Then I support it.´"

"We´ve now discussed the bill." With this, the ruling coalition is
now seeking to take an early vote on the legislation. The LDP has
told its members to limit their question time to about 10 minutes.
However, Sato continued his questions for about 20 minutes. He made
an appeal there: "It´s important to give easy-to-understand
explanations about how we are actually affected (in the aftermath of
halting the Maritime Self-Defense Force´s refueling activities in
the Indian Ocean). I will do so. I want the government to do so
together."

8) Review of sympathy budget settled, but setting timeframe for
abolishing pay allowances remains a challenge

Now that an agreement has been reached between the Ministry of
Defense (MOD) and the All Japan Garrison Forces Labor Union
(Zenchuro) to abolish the allowances to Japanese employees working
at U.S. bases, the question of reviewing Japan´s host nation support
(the so-called sympathy budget) for U.S. Forces Japan has generally
been settled. Although a MOD official described the agreement to
abolish the allowances as a major achievement, a timeframe for the
phase out has yet to be determined.

Given the nation´s tight fiscal situation, the government aimed at
deep cuts in Japan´s HNS as a whole, which is far higher than that
of other countries. At the same time, the government needed to give
consideration to Japan-U.S. relations which have become unstable due
to the suspension of the refueling operation in the Indian Ocean and
other factors. This prompted the government to put emphasis on
reducing the differential pay and language allowance to Japanese
employees that would not increase the burden on the United States.
Although Zenchuro agreed to abolishing the allowances at an early
stage, talks with MOD on measures to mitigate radical changes face
rough going. Zenchuro staged two strikes, which started to worry the
U.S. side about the effect on base operations. The government had to
heed to a U.S. request for making efforts to avoid strikes, and MOD
settled the matter by making concessions to Zenchuro.

MOD intends to end the drastic change alleviation measures in five
years. But a senior Zenchuro official said: "From the perspective of
their welfare, the allowances will have to stay beyond the next five
years." There still remains a seed of conflict for future talks.
9) Sympathy budget generally settled; Step to be taken to alleviate
drastic change in differential pay

Negotiations on Japan´s host nation support (the so-called sympathy
budget) for U.S. Forces Japan (USFJ) have generally been settled. An
agreement was reached between the Ministry of Defense (MOD) and the
All Japan Garrison Forces Labor Union (Zenchuro) to abolish the
"differential pay" of adding a 10 PERCENT allowance to the civil
servants´ base bay and the language allowance. The only remaining
matter is how to handle the USFJ facilities maintenance costs that
will go into in the fiscal 2008 budget bill.

Labor and management also agreed to abolish the pay raise system
that allows salaries to increase beyond the pay scale. In the fiscal
2008 budget bill, the sympathy budget will be reduced by 370 million
yen from this year. As a measure to alleviate drastic change, MOD
will pay 50 PERCENT of the differential pay and the language
allowance for five years and review them thereafter.

10) Moriya rearrested over bribes

The special investigation squad of the Tokyo District Public
Prosecutors Office rearrested former Administrative Vice Defense
Minister Takemasa Moriya yesterday on suspicion of accepting about
3.64 million yen in bribes from a former executive of defense
contractor Yamada Corp. The former executive was also rearrested for
giving the alleged bribe. It has been found that Yamada Corp. spent
a total of approximately 7.5 million yen in bribes and expenses for
golf trips for Moriya.

Prosecutors also rearrested Osamu Akiyama, former chief of Yamada
Corp.´s US subsidiary, for giving the bribe the same day. Moriya´s
wife Sachiko, who had been arrested over her involvement in Moriya´s
receipt of bribes, was released for the reason that she played a
minor role and that she regrets what she did.

11) Yamada Corp. former executive gave 100 million yen to Japan-U.S.
center in anticipation of influence peddling

It is now suspected that Yamada Corp. gave funds not only to former
Administrative Vice Defense Minister Takemasa Moriya but also to
Naoki Akiyama, executive director of the Japan-U.S. Center for Peace
and Cultural Exchange. Akiyama is close to lawmakers lobbying for
defense interests. Motonobu Miyazaki, a former executive of the
defense contractor, told persons around him that he transferred
approximately 100 million yen into a bank account of Akiyama. He
also admitted to the remittance during questioning by the special
investigation squad of the Tokyo District Public Prosecutors Office,
saying: "We offered money in anticipation of its influence peddling
to help us receive orders."

Akiyama reportedly has acted as an intermediary between Japanese and
American defense companies and politicians. The Japan-U.S. center
makes arrangements for visits to the U.S. by Japanese lawmakers and
regularly holds a meeting of the Japan-U.S. Security Strategy
Council by inviting American defense experts. Since fiscal 2003, the
center has arranged visits for 21 lawmakers, including Finance
Minister Fukushiro Nukaga and former Democratic Party of Japan
President Seiji Maehara.

12) Upper House committee decides to summon Akiyama as sworn
witness

The House of Councillors Foreign Affairs and Defense Committee has
decided to summon Naoki Akiyama, executive director of the
Japan-U.S. Center for Peace and Cultural Exchange, to the Diet as a
sworn witness. The committee initially planned to summon him on Dec.
20, but since Akiyama has said he would accept the summons, a
decision on the date has been entrusted to the chairman.

13) In first meeting of LDP North Korea panel, Yamasaki says ties
should be normalized under Fukuda administration

The Liberal Democratic Party´s subcommittee on issues related to the
Korean Peninsula, chaired by former Defense Agency Director General
Seishiro Eto, held its first meeting at party headquarters
yesterday. The panel was created to back up the government´s policy
toward North Korea. Former Vice President Taku Yamasaki, who assumed
the post of supreme advisor, expressed hopes that the party will
strengthen ties with North Korea through the panel, saying: "I would
like to normalize diplomatic ties between Japan and North Korea
under the Fukuda administration."

The first meeting brought together about 30 members of the Diet,
including former Defense Agency Director General Gen Nakatani.
Yamasaki emphasized that the establishment of the panel is in
accordance with Prime Minister Fukuda´s wishes. He then implied that
he would visit to Pyongyang, remarking: "We will be very busy next
year in dealing with issues with the Korean Peninsula. The party
will take proper steps to address the situation."

Yamasaki is known for having his own personal networks in North
Korea. In April 2004, he held a meeting with Jong Thae Hwa, then
ambassador for normalization talks with Japan in Dalian, China. He
also visited North Korea this January and reportedly met with Kim
Yong Kon, National Defense Committee counselor, and others. The
visit was criticized as "dual diplomacy."

14) Chief Cabinet Secretary Machimura: UFOs definitely exist,
unhappy with government´s formal response

Chief Cabinet Secretary Nobutaka Machimura stated in a press
conference yesterday: "I am sure that unidentified flying objects
exist." He elaborated: "Otherwise, it is impossible to explain the
Nazca Lines (in Peru, which some believe were created by aliens),
isn´t it?"

The government yesterday adopted in a cabinet meeting an official
response to a question by Ryuji Yamada, a Democratic Party of Japan
member. The statement says that the government has not confirmed the
existence of UFOs. It was the first time for the government to deny
the existence of UFOs. Machimura, while stressing that it was his
personal view that UFOs exist, said: "The government has offered
only a boilerplate response in its formal statement."

15) DPJ to place importance on urban areas in next Lower House
election

The largest opposition Democratic Party of Japan (DPJ or Minshuto)
has begun setting forth a clear stance of placing importance on
policy measures for urban areas in campaigning for the next House of
Representatives election. The DPJ won a sweeping victory in the July
House of Councillors election, by playing up its policy of giving
priority to improving regional economies by narrowing socioeconomic
disparities regional. What are reasons for the party trying to
review its campaign strategy?

DPJ head Ichiro Ozawa along with Takako Ebata, a former associate
university professor, whom the party has informally endorsed as its
candidate to run in the Tokyo No. 10 electoral district held a press
conference yesterday. In it, Ozawa emphasized: "We must do our best
to have her win the race." Ebata will compete in the race with
former Defense Minister Yuriko Koike. It is unusual for Ozawa to
introduce a candidate in a press conference.

Ozawa stressed his party´s policy of attaching emphasis on urban
areas, saying:

"We must set our goal to secure the majority of seats in the Tokyo
metropolitan area, which includes Tokyo and three other prefectures,
the Kansai region such as Osaka and Hyogo Prefecture, and Fukuoka
Prefecture in the Kyushu region."

In the background, there are many single-seat constituencies in
urban areas. In the 2005 Lower House election, the DPJ suffered a
crashing defeat. Ozawa noted: "If we are defeated in those areas, it
will be difficult for us to get the majority of the Lower House
seats." He predicts that the outcome of races in the urban areas
will be the key to a change of government.

However, election cooperation between opposition parties seems
difficult in some electoral districts in Tokyo and Kanagawa in which
candidates backed by the DPJ and Social Democratic Party are decided
to run. The DPJ has many challenges to overcome, including coming up
with policy measures attracting unaffiliated voters.

DPJ to field woman candidate in Tokyo No. 10 district, facing off
LDP´s Koike

The Democratic Party of Japan (DPJ or Minshuto) decided yesterday in
a meeting of its standing secretaries general to file eight
candidates for the next House of Representatives election, including
Takako Ebata, 47, former associate professor at the University of
Tokyo, who will run in the Tokyo No. 10 electoral district.
Former Defense Minister Koike now represents the No. 10 district.
The DPJ has not filed candidates in 72 districts of the 300
electoral districts across the nation.

16) DPJ to be ready to field 250 candidates by early next year for
next Lower House election due to delay in coordination on
candidates

The government and ruling parties have decided to set up a national
council on social security affairs. The main opposition Democratic
Party of Japan (DPJ or Minshuto) sees this move as a favorable wind
blowing in its direction. The DPJ, however, has yet to craft a
strategy for the next House of Representatives election due to a
delay in coordinating candidates and other reasons.

When asked by reporters yesterday about the plunging approval
ratings for the cabinet of Prime Minister Yasuo Fukuda in opinion
polls by various news companies, DPJ President Ichiro Ozawa
responded: "(Regarding the issue that identifying holders of a huge
number of national pension accounts have become difficult)
distrustful and irresponsible remarks by Prime Minister Fukuda and
other government officials have enraged the public." He continued:
"I want to see a dissolution of the Lower House as early as possible
for a snap general election. If public opinion calls for an
election, (the Prime Minister) will have no choice but to dissolve
the Lower House and call it. It is not a technical issue to manage
Diet affairs."

Even if the House of Councillors adopts a censure motion against the
Prime Minister, it would not be legally binding, although there is a
view that the adoption of a censure motion should trigger Lower
House dissolution. In the DPJ, a cautious view on the submission of
a censure motion is spreading, with one senior party member saying,
"We won´t be able to get public support only by the Lower House´s
overriding a decision by the Upper House on the new antiterrorism
special measures bill. I think it is not enough even with the
pension-record fiasco."

The DPJ has been slow in its election coordination. In a meeting
yesterday of its standing secretaries general, the largest
opposition party informally endorsed candidates to run in eight
electoral districts. The number of the DPJ candidates now totals
¶227. Therefore, the party´s target of filing 250 candidates before
the end of the year is likely to slip to early next year.
The DPJ has not yet fielded candidates in eight of the 25 electoral
districts in Tokyo. The reason is that the party has not overcome
the legacy of a crushing defeat in the 2005 Lower House election, in
which it won only one seat out of 25; and so it has worked on the
selection of candidates from scratch, considering that the Tokyo
races would affect its performance across the nation.
SCHIEFFER