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UNCLAS SECTION 01 OF 07 TOKYO 005615 
 
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 12/20/07 
 
 
Index: 
 
1) Prime Minister Fukuda expects to improve relations with South 
Korea under new conservative government  (Yomiuri) 
 
2) OECD projects that Japan's rank as international ODA donor will 
slip to sixth place by 2010, with aid budget being slashed every 
year  (Asahi) 
 
Political agenda: 
3) Opposition camp to heighten pressure on the Fukuda government in 
the Diet by tying it up with deliberations on other issues than the 
MSDF refueling bill  (Tokyo Shimbun) 
4) New Komeito seeks to assert its own policy imprint in the 
coalition government  (Yomiuri) 
5) Former Toyota Chairman Okuda to become key adviser to Prime 
Minister Fukuda  (Nikkei) 
6) Shoichi Nakagawa's conservative study group in the Diet picks up 
77 members from the Lower House  (Asahi) 
 
Defense and security affairs: 
7) Defense Ministry aims to shave 300 billion yen in outlays for 
defense equipment  (Asahi) 
8) Finance Ministry seeks to postpone procurement of Apache 
helicopter for the GSDF  (Sankei) 
9) Defense Ministry to increase number of in-house procurement 
specialists in the wake of defense procurement scandal involving 
trading firm  (Sankei) 
 
10) Chief Cabinet Secretary Machimura announces long list of 
independent administrative corporations that will be scrapped, made 
private or merged  (Nikkei) 
 
11) Australian government plans to monitor Japan's research whaling 
with court battle over whale preservation expected to heat up 
(Asahi) 
 
Articles: 
 
1) Government hopes for better relations with South Korea under Lee 
administration; Prime Minister Fukuda to attend inauguration 
 
YOMIURI (Page 2) (Full) 
December 20, 2007 
 
The Japanese government anticipates improvement in its relations 
with South Korea, with the victory of Lee Myung Bak, former Seoul 
mayor, in the presidential election on Dec. 19. In a bid to revive 
the suspended reciprocal visits between the Japanese and South 
Korean leaders, the government is looking into Prime Minister 
Fukuda's attendance of Lee's inauguration on Feb. 25. 
 
Chief Cabinet Secretary Machimura said in a press conference 
yesterday: "We expect the new president will exert leadership so 
that Japan-South Korea relations will be improved." 
 
A senior Foreign Ministry official also said the same day: "Mr. Lee, 
who comes from the business world, makes practical judgments. His 
debut in the political world may change bilateral relations for the 
better." 
 
Relations between Japan and South Korea just after incumbent 
 
TOKYO 00005615  002 OF 007 
 
 
President Roh Moo-hyun came into office four years ago were in good 
shape, with the leaders visiting each other's countries -- so-called 
shuttle diplomacy. But relations rapidly worsened, affected by the 
enactment by Shimane Prefecture of an ordinance setting "Takeshima 
Day" and then Prime Minister Koizumi's visits to Yasukuni Shrine. In 
April 2006, Japan and South Korea fell into a tense situation over 
marine research in waters near the Takeshima (Dokdo) islets. 
 
The inauguration of the Lee administration is likely to boost the 
trend of improvement in bilateral relations, set off by then Prime 
Minister Abe's visit to Seoul in October last year. 
 
While maintaining the incumbent administration's soft line toward 
North Korea, Lee has expressed his intention to offer economic 
support after Pyongyang completely settles the nuclear issue. Given 
this, a government official said: "Prospects are in sight for 
cooperation among Japan, the United States and South Korea in the 
six-party talks." 
 
2) Japan expected to drop to sixth place in global ODA in 2010, 
according to OECD projection 
 
ASAHI (Top Play) (Excerpts) 
Evening, December 19, 2007 
 
Japan is expected to slip to sixth place as a global donor of 
official development assistance (ODA) in 2010, according to a 
projection by the Organization for Economic Cooperation and 
Development's (OECD) Development Assistance Committee (DAC). Japan 
had won first place in net ODA rankings for the10th straight year 
until a decade ago but then slipped below the United States and 
Britain in 2006. By 2010, Japan is expected to be surpassed by 
Germany, France, and Italy. While Japan is slashing its ODA budget 
due the country's severe fiscal situation, European countries are 
steadily increasing ODA disbursements. Japan, which has long used 
ODA as a primary foreign policy tool, will be pressed to review its 
strategy. 
 
The DAC annually provides ODA data on its 22 member countries. The 
latest report estimates Japan's ODA disbursements in 2010 at 10.09 
billion dollars, down 1.1 billion dollars from 2006. The ratio of 
net ODA to gross domestic product (GDP) is also projected to drop 
from the 0.25 PERCENT  in 2006 to 0.21 PERCENT  in 2010. 
 
Because of the country's severe fiscal situation, Japan has been 
cutting its ODA budget by 3 to 10 PERCENT  since fiscal 2001. 
Meanwhile, European countries have boosted ODA disbursements, given 
their economic recoveries, as well as "growing awareness since the 
9/11 terrorist attack that providing relief to the impoverished 
elements in societies, who might turn into terrorists, is 
necessary," according to a senior officer of the Foreign Ministry's 
International Cooperation Bureau. 
 
The government has aimed to make use of the ODA budget effectively, 
allocating funds mainly to projects related to environmental 
protection, such as forest management and energy conservation, 
agricultural development, such as aid for soybeans production in 
Brazil, and sanitation, such as controlling infectious diseases. In 
part because of reduced ODA to China, Japan has distributed more ODA 
to other regions than East Asia. 
 
However, the Foreign Ministry is concerned about the slip in Japan's 
 
TOKYO 00005615  003 OF 007 
 
 
ODA ranking. Some members are calling for some measures to prevent a 
decline of Japan's influence in the international community. A 
senior Foreign Ministry official said: "We must take steps to 
improve the quality of our ODA program, for instance, by narrowing 
down the regions and sectors subject to the program and simplifying 
procedures for yen loans." 
 
3) Opposition camp to heighten pressure on ruling camp by pushing 
deliberations on issues other than the refueling bill (Tokyo) 
 
TOKYO SHIMBUN (Page 2) (Excerpt) 
December 20, 2007 
 
The four opposition parties, led by the Democratic Party of Japan 
(DPJ), are stepping up their pressure on the ruling parties by 
pressing for deliberations on bills other than the new antiterrorism 
special measure bill (refueling bill). The intention of the ruling 
camp in re-extending the current Diet session to Jan. 15 -- an 
unusual move for a session to cross over into the New Year - was to 
make certain it could pass the new special measures bill. The 
opposition camp believes strongly that it is unfair to extend the 
Diet just to deliberate on one bill. 
 
The DPJ in particular is disgruntled that two bills it had presented 
and passed in the Upper House, one on banning pension money from 
being used for other purposes and another on providing income 
subsidies to farm families, were only deliberated on for nine and 
seven hours, respectively, in the Lower House. In order to appeal to 
the public that the DPJ is the party that gives priority to the 
people's livelihoods, the party would like to show that it is 
promoting legislation linked closely to their welfare. 
 
This new policy course was endorsed yesterday when DPJ Diet Affairs 
Committee Chairman Kenji Yamaoka met his counterparts in the 
Japanese Communist Party, Social Democratic Party, and People's New 
Party. 
 
4) New Komeito strengthening policy requests, aiming at rebuilding 
party image following Upper House defeat by giving priority to 
people who work for a living 
 
YOMIURI (Page 4) (Excerpt) 
December 20, 2007 
 
The New Komeito has been strengthening its policy requests of the 
Fukuda administration from the standpoint of giving priority to 
people who work for a living (seikatsusha). Reflecting on the defeat 
it experienced in the Upper House election, the party has been 
revamping its stance, and this is one aspect of it. However, the 
Liberal Democratic Party (LDP) has no choice but to give 
consideration to the Democratic Party of Japan (DPJ), which has 
become the dominant party in the Upper House, so whether it can go 
along with the New Komeito's wish to change policy course is 
unclear. 
 
5) Toyota's Okuda to be advisor to Prime Minister Fukuda 
 
NIKKEI (Page 2) (Full) 
December 20, 2007 
 
The government decided yesterday to appoint Hiroshi Okuda, advisor 
to Toyota Motor and former chairman of the Japan Business Federation 
 
TOKYO 00005615  004 OF 007 
 
 
(Nippon Keidanren), as a special advisor to the Cabinet. He will 
give advice to Prime Minister Yasuo Fukuda as a private-sector 
person. The government plans to issue the appointment as early as 
Dec. 26. Okuda served as a member of the Economic and Fiscal Policy 
Council in the Koizumi cabinet. He and Fukuda have enjoyed close 
ties since Fukuda was chief cabinet secretary. 
 
6) 77 lawmakers join study group led by Shoichi Nakagawa 
 
ASAHI (Page 4) (Full) 
December 20, 2007 
 
A study group, chaired by former LDP Policy Research Council 
Chairman Shoichi Nakagawa, met for the second time in the Diet 
building yesterday. The group decided to call itself Shin 
Hoshuseisaku Kenkyu-kai (True Conservative Policy Study Group). As 
of yesterday, a total of 77 upper and lower house members from eight 
factions, excluding the Tanigaki faction, plus independents joined 
the group. 
 
The study group was established in early December by Lower House 
member Takeo Hiranuma and others under the banner of reuniting 
conservative forces. 
 
7) MOD to aim at reducing defense equipment costs by 300 billion 
yen 
 
ASAHI (Page 4) (Full) 
December 20, 2007 
 
The Ministry of Defense (MOD) announced yesterday that it would 
reduce the defense equipment costs by introducing numerical targets. 
The ministry will aim to reduce the costs by 3 PERCENT  annually in 
a five-year period from fiscal 2007 through fiscal 2011 by 
purchasing equipment in bulk, extending the aircraft repair period, 
and simplifying equipment to spend the saved costs on purchasing 
other equipment. The equipment costs came to 1.8 trillion yen in 
fiscal 2006. The ministry will aim at reducing 300 billion yen, or 3 
PERCENT  of it, by using these methods. The results will be 
announced every fiscal year. 
 
MOD will also increase the number of officials stationed in the 
United States to check padded bills by defense equipment trading 
houses from the current three to 10 starting in fiscal 2008. 
 
8) GSDF to give up on including funds for 2.16 billion yen 
helicopter in FY2008 budget 
 
SANKEI (Page 2) (Full) 
December 20, 2007 
 
The Ministry of Finance (MOF) decided yesterday to reject the 
Ministry of Defense's (MOD) request for funds in its fiscal 2008 
budget for an AH-64D attack helicopter (commonly called the Apache 
Longbow) for the Ground Self-Defense Force, a MOD source revealed 
yesterday. The reason is the AH-64D helicopter's high price tag -- 
21.6 billion yen per unit, which is equivalent to the cost of two 
fighter jets. MOF's decision is likely to create a stir in the way 
defense equipment has been procured, which has often been pointed 
out as being too high. 
 
MOD began purchasing the AH-64D, reputed to be the world's strongest 
 
TOKYO 00005615  005 OF 007 
 
 
attack helicopter, in fiscal 2002 as the successor to the AH-1S 
attack helicopter (dubbed the Cobra). The GSDF has procured a total 
of 10 AH-64Ds as of this fiscal year. MOD planned to deploy a total 
of 62 AH-64Ds in the future as replacements to the 84 AH-1S 
helicopters. 
 
But the unit price, which was originally 6 billion yen, is expected 
to jump to 8.3 billion yen in fiscal 2008 due to the domestic 
production of its parts. In addition, the helicopter's manufacturer, 
Boeing Co., has decided to stop producing the AH-64D, putting a cap 
on the GSDF's number of the Apache Longbows at 13. 
 
The unusually high unit price of 21.6 billion yen also includes 
MOD's step to shoulder the equipment investment for the Japanese 
maker producing the AH-64D under license. 
 
A senior MOD official commented: "The cost can be reduced 
substantially by purchasing products in bulk in the initial year 
instead of obtaining equipment in multiple years based on the 
single-year rule." 
 
9) MOD to increase procurement officers to review high-cost 
equipment 
 
SANKEI (Page 2) (Full) 
December 20, 2007 
 
The Ministry of Defense (MOD) held a meeting yesterday of the 
project team chaired by Parliamentary Secretary for Defense Minoru 
Terada to study how defense equipment should be procured, and 
discussed ways to correct the ministry's structure to purchase 
products at cost, as was exposed by defense contractor Yamada 
Corp.'s bill-padding practice. In order to prevent trading houses 
from overcharging for equipment by forging estimates, MOD has 
decided to strengthen the checking system by adding seven import 
procurement officers to the Equipment Procurement and Construction 
Office in the United States, which is currently staffed with three. 
 
At present, two import procurement officers are stationed in New 
York and one in Los Angeles to research prices. MOD intends to 
establish a 10-person checking system, such as by increasing the 
number of officers in New York to four and that in Los Angeles to 
three, to increase the inspection rate from the current less than 7 
PERCENT  to 33 PERCENT . In dispatching personnel, the ministry will 
implement educational programs to enhance language skills and 
expertise in such areas as business transactions in the United 
States. 
 
At the same time, in order to curb the equipment-related businesses 
expenditures totaling 1.8 trillion yen, MOD has also decided to aim 
at reducing the costs by 15 PERCENT  by fiscal 2011. 
 
10) Reform of independent administrative institutions: NEXI to 
become a government corporation; 200 IAIs to be reduced to 86 
 
NIKKEI (Page 2) (Full) 
December 20, 2007 
 
A general agreement was reached yesterday in negotiations between 
Chief Cabinet Secretary Nobutaka Machimura and other cabinet 
ministers that the present 200 independent administrative 
institutions will be reduced to 86 by such means as privatization of 
 
TOKYO 00005615  006 OF 007 
 
 
merger. In his session with Economy, Trade and Industry (METI) 
Minister Akira Amari, Machimura proposed turning the Nippon Export 
and Investment Insurance (NEXI) to a wholly-owned (100 PERCENT ) 
government corporation and Amari expressed the acceptance of the 
proposal on the condition that the government will not sell its 
owned shares in the corporation. 
 
Machimura and Land, Infrastructure, and Transport Minister Tetsuzo 
Fuyushiba confirmed a policy direction of delaying three years a 
conclusion on privatizing the Urban Renaissance Agency (URA) and 
Japan Housing Finance Agency. However since Administrative Reform 
Minister Yoshimi Watanabe strongly opposed the idea, a final 
decision will be made by Prime Minister Yasuo Fukuda. Asked by 
reporters about how he would handle such issues as URA 
privatization, Fukuda responded last night: "If possible, I would 
like to make decisions in the 21st." The outlook is however that the 
privatization issue will be resolved as agreed by Machimura and 
Fuyushiba. 
 
Machimura and Health, Labor and Welfare Minister Yoichi Masuzoe 
agreed to integrate the National Institute of Occupational Safety 
and Health, Japan and the Japan Labor and Welfare Organization. They 
also decided to reach a conclusion within one year on a review of 
the management of Employment and Human Resources Development 
Organization of Japan. 
 
Education, Culture, Sports, Science and Technology Minister Kisaburo 
Tokai told Machimura that his ministry would accept his proposals: 
Merger of the National Research Institute for Earth Science and 
Disaster Prevention and Japan Agency for Marine-earth Science and 
Technology be merged; and merger of two university-related 
independent administrative institutions. Machimura and Agriculture, 
Forestry and Fisheries Minister Masatoshi Wakabayashi agreed to 
merge three independent administrative institutions. 
 
11) Australia to monitor Japanese whalers with eye on future legal 
action 
 
ASAHI (Page 7) (Full) 
December 20, 2007 
 
Akihito Sugii, Singapore 
 
Australian Foreign Minister Stephen Smith and Environment Minister 
Peter Garrett announced yesterday that their country would dispatch 
customs vessels to monitor Japanese whale-research ships in the 
Antarctic Ocean in the coming days. The customs vessels will collect 
photographic and video evidence for use in support of future 
Australian legal action to the International Court of Justice and 
the International Tribunal for the Law of the Sea. 
 
Smith stated at a press conference held in Canberra: "We cannot 
scientifically justify the killing of whales." The customs vessels 
are expected to monitor Japanese whalers for about 20 days. 
Australia will also dispatch government aircraft which are used for 
scientific research of the Antarctic Continent. 
 
Smith said that the purpose of dispatch of the ships was 
surveillance of whaling activities and collection of evidence, not 
enforcement or intervention. He also stated that Australia would 
create a new post in charge of preservation of whales, and that 
Australia together with other anti-whaling countries would urge the 
 
TOKYO 00005615  007 OF 007 
 
 
Japanese government to suspend whaling, taking advantage such 
occasions as the International Whaling Commission (IWC). 
 
The Australian government reportedly notified the Japanese 
government through the Japanese Embassy in Canberra. 
 
Smith stated: "Australia places importance on close and friendly 
relations with Japan. But this is something to which we can never 
agree." 
 
Prime Minister Kevin Rudd's stance of not hesitating to dispatch 
marine vessels and aircraft is not supported by opposition leader 
head Nelson, who said, "Such would substantially damage our 
relations with Japan." 
 
Ships of the Institute of Cetacean Research (in Tokyo), which left 
Shimonoseki Port in Yamaguchi Prefecture, have already arrived in 
the Antarctic Ocean. The institute plans to capture about 850 mink 
whales, 50 fin whales and 50 humpback whales. 
 
The institute has decided to take humpback whales starting this 
year. However, Australia has strongly opposed to hunting them 
because they are resources used to promote tourism in Australia. 
 
Chief Cabinet Secretary Machimura: Japan will explain need for 
research-whaling in the future as well 
 
Chief Cabinet Secretary Nobutaka Machimura stated in a press 
conference yesterday: 
 
"The Australian government announced the dispatch of airplanes and 
ships. We have acknowledged there is a strong opposition against 
(Japan's research-whaling). Japan wants to explain through 
diplomatic channels the need for research-whaling in the future as 
well." 
 
He then revealed that the Japanese government would continue to seek 
Australia's understanding. 
 
SCHIEFFER