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UNCLAS SECTION 01 OF 10 TOKYO 005689 
 
SIPDIS 
 
PARIS PLEASE PASS TO USOECD 
STATE PLEASE PASS TO USTR 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ETRD ECON JA ZO EAGR
SUBJECT: The Japan Economic Scope--December 28, 2007 
 
¶1. (U) This cable contains the Japan Economic Scope from 
December 28, 2007. 
 
¶2. (SBU) Table of Contents 
 
Japanese Government Moves 
¶3.  Personnel Shuffle at MOFA? 
¶4.  Reg Reform is Back 
¶5.  Japan Halts Plans to Start Hunting Humpback Whales 
 
Planes and Trains 
¶5.  Rail Improvement Cut into Domestic Aviation Business 
¶6.  JAL Reforms Increase in Assertiveness, Fail to Make a 
Difference 
¶7.  ANA Expands Cargo Service but Does Not Expect Immediate 
Returns 
¶8.  Japan Plans 'Smart' Pass for Asia Mainland 
 
Climate Change 
¶9.  METI-MOE Joint Report: "Japan's Kyoto Target Can Be 
Achieved" 
 
Fiscal Policy 
¶10. FY08 Budget Approved by Cabinet 
¶11. DPJ Tax Proposals Highlight Tax Cuts 
 
Financial Issues 
¶12. Japan as Number 2 -- And Falling? 
¶13. Tokyo Stock Exchange Threatens to De-list Sanyo over 
Accounting Problems 
¶14. FSA Announces Plan to Strengthen Japan's Capital Markets 
¶15. NikkoCitigroup, Keio University Announce Joint Study Group 
on Tokyo as Global Financial Center 
¶16. Advantage Partners Offer $2.2B Bid for Tokyo Star Bank 
 
Technology 
¶17. Willcom, KDDI Win Next-generation Licenses for Wireless 
Broadband 
¶18. Okinawa Starts Regional GIX Demonstration Experiment 
 
Energy 
¶19. JBIC to Give Its Largest Loan Ever to Abu Dhabi National 
Oil Company 
¶20. Japan Firms Ink Nuclear Energy Deal with Kazakhstan 
 
NOVA English School Troubles 
¶21. G.communication Chair Inayoshi Comments on NOVA Acquisition 
 
Royal News 
¶22. Emperor's 74th Birthday 
 
Sports 
¶23. New Crop of Japanese Players to Spice up Majors in 2008 
¶24. Long Suffering Red Sox Fans Finally Have Something to 
Divert Attention 
 
¶25.  This Week's Cables 
 
------------------------- 
JAPANESE GOVERNMENT MOVES 
------------------------- 
 
¶3.  (U) Personnel Shuffle at MOFA? 
 
Media outlets have described a number of upcoming personnel 
shifts at the Foreign Ministry, but we have been unable to 
confirm any of them. 
 
According to Mainichi, MOFA's senior bureaucrat, Vice Foreign 
Minister Shotaro Yachi will retire and be replaced by Deputy 
Foreign Minister Mitoji Yabunaka, who is known well to the 
Embassy and in Washington.  According to a Sankei report, 
Yabunaka's appointment will be approved at a cabinet meeting 
January 15. 
 
Mainichi indicated that Yachi refused a request to remain in 
his post until the G-8 summit next summer.  He has accepted a 
teaching post at Waseda University. 
 
According to Asahi on December 27, Yabunaka will be replaced by 
Kenichiro Sasae, who has been serving as Director General for 
MOFA's Asian and Pacific Affairs Bureau.  Akitaka Saiki, the 
 
TOKYO 00005689  002 OF 010 
 
 
DCM in Japan's Embassy in Washington, will replace Sasae. 
 
The newspaper noted that Yabunaka, Sasae, and Saiki have all 
been very involved in negotiations with North Korea, and 
speculated that their appointments represent an effort by the 
Fukuda administration to engage more vigorously on North Korea 
than before. 
 
Meanwhile, Asahi also reported that Ichiro Fujisaki will 
replace Ryozo Kato as Japan's envoy in Washington.  Fujisaki 
has been Japan's top diplomat in Geneva.  Mainichi also 
reported the same shuffle, but said it would not take place 
until at least next July's G-8 summit. 
 
According to some sources, Fujisaki is known to be very pleased 
with himself--possessing a certain arrogance that sometimes 
does not sit well with his interlocutors.  Or, as one source 
put it, the difference between Fujisaki and Kato is the 
difference between night and day. 
 
When we asked a mid-level official at MOFA who would likely be 
familiar the personnel shifts being reported in the media, he 
was very tight-lipped and said he could not confirm any of the 
movements. 
 
This usually means that the reports are accurate and the formal 
announcements will come shortly.  (ECON:  Nicholas Hill) 
 
¶4.  (SBU) Reg Reform is Back 
 
The last round of Regulatory Reform talks between the United 
States and Japan took place in December, with a number of 
different working groups convening simultaneously in Tokyo. 
 
In the Cross Sectoral Working Group, the two sides agreed to 
set aside some agricultural issues, to be taken up January 10- 
11, again in Tokyo. 
 
An inter-agency delegation led by USTR and USDA will 
participate in those talks. 
 
The U.S. recommendations addressed at that time are maximum 
residue limits, food additives, animal products, and plant 
quarantine issues.  Japanese recommendations are BSE measures, 
organic crop products, and Unshu oranges. 
 
The two sides are covering each other's recommendations in 
advance of drafting a Report to Leaders, expected to be 
exchanged next summer. 
 
For more information on the talks, please contact us.  (ECON: 
Nicholas Hill) 
 
¶5.  (SBU) Japan Halts Plans to Start Hunting Humpback Whales 
 
In a press conference on December 21, Chief Cabinet Secretary 
Nobutaka Machimura announced that Japan will suspend its plans 
to start hunting 50 Humpback whales in the Southern Ocean.  The 
Asahi Shimbun reported that this decision was made as a 
response to a request by International Whaling Commission (IWC) 
Chair and U.S. Commissioner to the IWC, William Hogarth. 
During a mid-December visit to Japan, Mr. Hogarth also promised 
to work at normalizing the highly divisive IWC. 
 
Since 2005, Japan has expanded its annual research whaling 
program in the Antarctic by catching 50 fin whales and doubling 
the Minke whale catch to 850.  From the 2007/08 season, it had 
also planned to add 50 Humpback whales.  This planned addition 
faced particularly strong criticism from anti-whaling nations 
such as Australia because of the species' popularity with whale 
watching tours.  As a sign of increased opposition to Japan's 
research whaling, Australian PM Rudd announced a plan to 
dispatch patrol vessels to monitor whaling activities. 
 
Although whale meat is persistently popular in Japan, the 
suspension of the hunt should not negatively affect the 
marketplace.  Hiroshi Nakada, President of Geishoku Kabo (Whale 
Food Lab), a GOJ-created whale meat marketing company, told 
Post that because the quality of humpback whale meat is not 
high, his business would not suffer.  For more information 
please see Tokyo 5536 and 2006 Tokyo 4424.  (ECON:  Keiko 
Kandachi) 
 
TOKYO 00005689  003 OF 010 
 
 
 
----------------- 
PLANES AND TRAINS 
----------------- 
 
¶6.  (SBU) Rail Improvement Cut into Domestic Aviation Business 
 
The bullet train line (shinkansen) planned to link the nation's 
main island of Honshu and Hokkaido will get a budget boost next 
fiscal year as construction barrels toward its scheduled 
completion at the end of fiscal 2015, according to a December 
26 Nikkei news article. 
 
This is bad news for the domestic aviation industry which has 
already been struggling under weak sales and increasing loss of 
passengers to the shinkansen.  A representative of a Japanese 
low cost carrier told us his carriers' few remaining profitable 
routes are Hokkaido, Nagoya-Osaka and Naha routes. 
 
JR Tokai announced plans to self-finance a Tokyo-Nagoya 
magnetic levitation train line slated to begin operation in 
¶2025.  Maglev service would shorten the trip between the two 
metropolitan areas to 40-50 minutes. JR Tokai outlined the 
initiative in April and estimates the cost of building the 290 
km route at 5.1 trillion yen.  The decision to use its own 
money to build the maglev shinkansen line reflects its concern 
over the lack of certainty of future government funding. 
 
ANA officials told us that before the latest "Shinkansen 700" 
cars came into service last summer, travel time between Tokyo 
and Kansai was about the same by train or by air, if you 
include the time needed to pass through airport security.  But, 
the new train service is now faster than air travel.  In 
response, both ANA and JAL lowered ticket prices to match the 
cost of shinkansen tickets, but have not, so far, seen an 
increase in passenger flow.  (ECON: Charlotte Crouch) 
 
¶7.  (SBU) JAL Reforms Increase in Assertiveness, Fail to Make a 
Difference 
 
JAL has continued its internal reforms with increasing 
assertiveness.  Despite telling us last week they had no plans 
to sell more hotels, news reports this week indicated they sold 
hotels in London and Saipan for eight billion yen ($70 million). 
 
JAL finally reached an agreement with its largest labor union, 
JALFIO, on company retirement revisions, including a 10 percent 
cut in retirement benefits according to a December 21 Nikkei 
article.  JALFIO represents 70 percent of the JAL's unionized 
workforce. 
 
Nikkei December 24 reported JAL has asked a Brazilian company 
to provide 20 pilots--a move JAL told us a few months ago they 
would not consider.  At that time, we noted Korean Air makes 
extensive use of lower cost pilots, mostly from Latin America, 
but JAL officials said such a strategy would not work for them. 
 
A relatively minor story about JALWAYS attendants serving 
leftover food to customers comes at a time the company and its 
subsidiaries can least weather bad publicity.  JAL's passenger 
load is down 3.4 percent from last year, but international load 
rose one percent.  ANA meanwhile, saw it passenger load rise 
8.8 percent to an all-time high. (ECON: Charlotte Crouch) 
 
¶8.  (SBU) NA Expands Cargo Service but Does Not Expect 
Immediate Returns 
 
ANA officials confirmed to us details of a Nikkei article 
indicating the company will take a 34 percent stake in a cargo 
delivery joint venture with Nippon Express and Kintetsu World 
Express.  The two delivery companies will each hold a 28 
percent stake in the venture. 
 
However, ANA officials said cargo business remains slow and it 
could be years before it picks up again. 
 
We also discussed Japan's ODA projects supporting road and rail 
construction in Laos, Cambodia, Vietnam and Thailand as part of 
a GOJ strategic plan to expand markets for Japanese products in 
the region.  Both ANA and JAL officials were skeptical the plan 
could increase the air cargo market into or out of Japan. 
 
 
TOKYO 00005689  004 OF 010 
 
 
JAL officials pointed out, despite heavy GOJ investment in the 
Shanghai airport, no one in China knows that the Japanese built 
it.  Officials from both airlines saw no value in the GOJ's 
attempts to increase the potential cargo market on the Asia 
mainland using ODA funds to increase the region's 
transportation infrastructure. 
 
Nippon Express and Kintetsu World Express originally sought to 
negotiate a tie-up with JAL but the air carrier, under pressure 
from it main lenders to restructure its money-losing cargo 
business, could not seal the deal.  (ECON: Charlotte Crouch) 
 
¶9.  (U) Japan Plans 'Smart' Pass for Asia Mainland 
 
Japanese transport ministry official Hiroyuki Hotta told 
Reuters December 21 the GOJ plans to develop a card which can 
be used to pay train fares throughout Asia.  Smart cards, which 
are held briefly over a scanner to open station ticket gates, 
are widely used in Tokyo, Seoul and Hong Kong.  But they have 
yet to transcend borders, because there are not yet 
international standards for the data they contain. 
 
Embassy officials met with Tokyo Metro (subway) officials last 
month and they boasted Japan has recently developed a Smart 
Card which will work on all trains lines in Japan, regardless 
of the operator, increasing the ease with which passengers can 
move from one transit system to another. 
 
Japan's transport ministry aims to solve the international 
challenge by developing cards with chips that work in different 
countries.  "It's significant for such a system to be developed 
in a region (like Asia) where there are subways and commuter 
railways in densely populated areas," Hotta said.  The smart 
cards should be in use by 2011, Hotta said. 
 
An independent consultant who spoke with Embassy officials last 
week detailed plans for GOJ's development of transportation 
systems on the Asia mainland.  Japan's work on developing 
transport systems in Asia makes it the ideal place to also 
develop a "Smart Card" that can be used on all system.  (ECON: 
Charlotte Crouch) 
 
-------------- 
CLIMATE CHANGE 
-------------- 
 
¶10.  (U) METI-MOE Joint Report: "Japan's Kyoto Target Can Be 
Achieved" 
 
A joint committee of the Ministry of Economy, Trade and 
Industry's (METI) Industry Structure Council and the Ministry 
of Environment's (MOE) Central Environment Council December 21 
published its final report on Japan's revised plan to reduce 
greenhouse gas (GHG) emissions to meet its Kyoto Protocol 
target. 
 
The report says industry and other sectors will need to 
implement extra measures in order to reduce CO2 emissions by 
the equivalent of an additional 35-36 million tons. 
 
These new measures include a reinforced industry voluntary 
action plan (to cut 18 million-tons), revision of the Energy- 
Conservation Law (9.5-11.5 million tons) and national energy 
conservation campaigns such as "Cool Biz" and "Eco-Drive" 
(6.78-10.5 million tons). 
 
According to the report, if all these plans are successfully 
implemented, Japan will be able to attain its target of cutting 
GHG emissions by 6 percent from the 1990 level by 2012. 
 
However, according to a December 27 Nikkan Kogyo Shimbun 
article, there is some disagreement on the accuracy of the 
report's findings.  Dr. Yoichi Kaya, chair of the METI-MOE 
joint committee and Director-General for the Research Institute 
of Innovative Technology for the Earth (RITE, a METI-related 
organization), admitted that the report is "full of 
uncertainty."  (ECON: Keiko Kandachi) 
 
------------- 
FISCAL POLICY 
------------- 
 
 
TOKYO 00005689  005 OF 010 
 
 
¶11.  (U) FY08 Budget Approved by Cabinet 
 
Japan's Cabinet December 24 approved the central government 
draft regular budget for FY08 (April 2008--March 2009), 
clearing the way for its submission to the Diet's ordinary 
session to be convened in January. 
 
The regular general account budget for FY08 shows an increase 
of 0.2 percent in overall outlays over the initial FY07 budget, 
primarily due to increases in mandatory spending items, such as 
social security. 
 
However, discretionary outlays have been cut by 1.1 percent 
compared to the initial FY07 budget.  This includes cuts in 
public works spending of 3.1 percent and ODA spending of 4.0 
percent. 
 
The budget supports  government priorities, such as addressing 
regional disparities, with more resources, including an 
increase in transfers to local governments of 4.6 percent and 
more spending for SMEs (Small and Medium Enterprises), which 
will increase 2.2 percent.  The FY08 budget projects a slight 
decline in government bond issuance (a rough proxy for the 
central government fiscal deficit on a national accounts basis) 
to 4.8 percent of GDP, compared to a projected 4.9 percent of 
GDP in FY07.  (FINATT:  Shuya Sakurai/Maureen Grewe) 
 
¶10.  (U) DPJ Tax Proposals Highlight Tax Cuts 
 
The Democratic Party of Japan (DPJ) December 25 announced its 
FY08 tax proposals, which focus on tax cuts. 
 
Many of the proposals are at odds with those of the ruling 
coalition, indicating the budget may face a tough time in the 
Diet when consideration of tax bills begins next year.  Main 
differences include the treatment of the gasoline surcharge tax, 
taxes on financial income, and the use of consumption tax 
revenue. 
 
In contrast to the ruling LDP/Komeito recommendation to extend 
the gasoline tax surcharge for 10 years and maintain its use 
for road construction, the DPJ proposes to eliminate the 
surcharge, as well as the earmark underlying taxes for roads, 
instead having the funds added to general revenue. 
 
Through this measure, the DPJ reportedly wants to reform the 
pork-barrel nature of road construction and gain public 
approval through lower gasoline prices.  Regarding taxes on 
financial income, the DPJ proposes allowing the current tax 
break on capital gains to expire as planned next year with the 
rate to rise back to 20 percent, while extend the special 10 
percent rate on dividend income. 
 
The ruling parties have proposed extending the 10 percent rate 
on both taxes through 2010 with a ceiling of five million yen 
for capital gains and one million yen for dividends.  Capital 
gain or dividend income above those ceilings would be taxed at 
20 percent. 
 
For the consumption tax, the DPJ, like the ruling coalition, 
did not call for an immediate hike, but instead proposed use of 
all revenues from the current five percent consumption tax 
exclusively to fund basic pensions, and for an overhaul of the 
nation's social security programs as part of which an increase 
in the consumption tax rate could be considered. 
 
A Nikkei report estimated that the DPJ's proposals would result 
in the loss to central and regional governments of a combined 
2.6 trillion yen in revenues from the elimination of the road 
tax surcharge alone.  (FINATT:  Maureen Grewe) 
 
---------------- 
FINANCIAL ISSUES 
---------------- 
 
¶12.  (U) Japan as Number 2 -- And Falling? 
 
Japan may be enjoying its longest sustained economic growth in 
the postwar period -- over five years now with no downturn -- 
but, by other measures, Japan's economy remains in a funk. 
 
According to a December 27 Nikkei report, Japan's share of 
 
TOKYO 00005689  006 OF 010 
 
 
global gross domestic products slipped below 10 percent for the 
first time in almost a quarter of a century.  At 9.1 percent of 
global GDP, Japan's share of the world's economic pie is 50 
percent off its peak in 1994. 
 
According to the Nikkei report, which cited data released by 
the Cabinet Office, Japan's nominal GDP was up 1.4 percent in 
yen terms in 2006 but down 4 percent in dollar terms at some 
4.37 trillion dollars, reflecting the yen's erosion in foreign 
exchange markets last year. 
 
Nikkei noted that Japan's ranking in per income data also 
slipped, and the country global presence was bound to slip 
further if reform efforts bog down.  (ECON:  Nicholas Hill) 
 
¶13. (U) Tokyo Stock Exchange Threatens to De-list Sanyo over 
Accounting Problems 
 
The Tokyo Stock Exchange December 26 threatened troubled 
Japanese electronics manufacturer Sanyo Electric with delisting 
after it submitted six years of corrected earnings reports. 
Sanyo, which is just starting to recover after a major 
restructuring drive, revised earnings reports for six years 
beginning with FY2000 and admitted earlier reports, had 
underestimated losses. 
 
"We take the earnings correction very seriously," Sanyo 
president Seiichiro Sano told a press conference at the 
company's base in Osaka while bowing deeply.  "We will create a 
system so something like this is never repeated." 
 
The Tokyo Stock Exchange said it would consider delisting Sanyo, 
whose shares fell 3.60 percent December 26 despite strong gains 
on the broader market. 
 
Japan's Securities and Exchange Surveillance Commission 
recommended the Financial Services Agency fine Sanyo Electric 
Co. for alleged accounting irregularities, according to 
December 25 Nikkei article. 
 
The watchdog said Sanyo recorded a smaller loss amount at an 
affiliated company than it had actually incurred for the fiscal 
first half that ended in September 2005. 
 
The SESC recommended FSA fine Sanyo 8.35 million yen (roughly 
$70,000 dollars.)  (ECON: Charlotte Crouch) 
 
¶14.  (U) FSA Announces Plan to Strengthen Japan's Capital 
Markets 
 
On December 21, the Financial Services Agency (FSA) announced 
its Plan for Strengthening the Competitiveness of Japan's 
Financial and Capital Markets as part of the government's long 
-term plan to develop Tokyo as a global financial center. 
 
Based on this plan, FSA will submit bills to revise the 
Financial Instruments and Exchange Law during the 2008 ordinary 
Diet session, which begins mid-January, and hopes to implement 
the amended law from next summer. 
 
The four main points of the Plan are: (1) bolstering the 
confidence and vigor of the markets; (2) ensuring a business 
environment that vitalizes the financial services industry and 
promotes competition; (3) improving the regulatory environment, 
and; (4) improving the broader market environment.  For more 
details, please click here.  (ECON: Satoshi Hattori) 
 
¶15.  (U) NikkoCitigroup, Keio University Announce Joint Study 
Group on Tokyo as Global Financial Center 
 
At a December 26 financial Seminar, Nikko Citigroup and Keio 
University's Global Security Research Institute (a project of 
former minister and Koizumi Cabinet Economic Guru Heizo 
Takenaka) announced the launch of a joint study group on the 
GOJ's initiative to make Tokyo an international financial 
center. 
 
The study group defined three conditions for international 
financial centers, i.e. (1) a substantial volume of 
transactions of stocks, bonds, and other commodities or 
financial instruments; (2) substantial volume of investment 
banking practices, such as new issuance of shares, debt 
 
TOKYO 00005689  007 OF 010 
 
 
instruments or M&A deals, and; (3) significant numbers of 
regional headquarters of world's leading financial institutions. 
 
For Tokyo to meet such conditions, the study group is convinced 
that continued stable growth of the Japanese economy and 
expansion of trading markets and new issuances are essential. 
They also said opening Japan's financial and business 
activities to more foreign competition is inevitable, though 
this will present significant hurdles for Japanese businesses. 
 
The study group considers that to make Tokyo as an 
international financial center should not be the ultimate goal, 
but it should be a vehicle for achieving a larger goal, namely, 
for Tokyo to become an international business center. 
 
To that end, the announcement called for Japan to further 
rejuvenate its asset management capability and "let money work" 
through competition between domestic and foreign asset 
management companies. 
 
The study group will conduct a three-year joint research 
project and issue a final report in mid 2010.  (ECON: Satoshi 
Hattori) 
 
¶16.  (U) Advantage Partners Offer $2.2B Bid for Tokyo Star Bank 
 
Japanese private equity fund Advantage Partners said it would 
launch a bid for Tokyo Star Bank Ltd worth as much as 252 
billion yen , allowing investment fund Lone Star to cash out of 
its 68 percent stake in the lender, according to a December 21 
Reuter's article. 
 
Advantage Partners said it would offer 360,000 yen for each of 
the 700,000 Tokyo Star shares owned by Lone Star, a 2.3 percent 
premium over Tokyo Star's December 21 closing share price of 
352,000 yen and 8.5 percent above its three-month average price 
of 331,661 yen. 
 
The news brings to an end a torturous few months for the funds, 
which have had to steer the deal through the storm in global 
credit markets and a tough regulatory review.  (ECON: Charlotte 
Crouch) 
 
---------- 
TECHNOLOGY 
---------- 
 
¶17.  (U) Willcom, KDDI Win Next-generation Licenses for 
Wireless Broadband 
 
On December 21st, MIC granted new licenses to Carlyle-owned 
Japanese PHS (personal handy-phone system) service provider, 
Willcom Inc, and a KDDI-led consortium, Wireless Broadband 
Planning KK (WBPK) to provide next-generation 2.5 GHz wireless 
broadband service. 
 
The services will allow quick Internet access and high-speed 
data transmission while the user is traveling by car or train. 
WBPK, which also includes a stake by Intel Corp., will provide 
the service utilizing WiMAX (Worldwide Interoperability for 
Microwave Access) technology, while Willcom will offer its 
services via next-generation PHS technology.   The two plan to 
launch the service in 2009.   (ECON: Kaoru Nakata) 
 
¶18.  (U) Okinawa Starts Regional GIX Demonstration Experiment 
 
Two Okinawa IT companies, First Riding Technology Inc (FRT) and 
Okinawa Cross Head Inc., have begun a Global Internet Exchange 
(GIX) experiment intended to better link Okinawa, mainland 
Japan and Hong Kong starting December 15. 
 
The two companies intend to develop a direct internet 
connection service to mainland Asia, rather than going through 
the internet access hub in mainland of Japan or the U.S., in 
order reduce communication costs and increase the speed of data 
transmission. 
 
The companies are leasing a submarine cable between Okinawa and 
Taiwan and another between Taiwan and Hong Kong from FLAG 
Telecom Inc. (an Indian owned company) and provide global 
internet access service to the companies who use FRT's data 
center. 
 
TOKYO 00005689  008 OF 010 
 
 
 
Thus far, four Japanese companies, Calbee Foods, Gaitame.Com, 
Index Okinawa and Cybazu Inc. have signed on to use this 
service beginning in 2008. 
 
The Okinawa Prefectural Government is preparing a budget of 
about $36,000 for FY2007 and about $82,000 for FY2008 to aid 
this regional GIX experiment and to reduce users' costs. (NAHA: 
Thomas M. Kreutzer/Akinori Hayashi) 
 
------ 
ENERGY 
------ 
 
¶19. (U) JBIC to Give Its Largest Loan Ever to Abu Dhabi 
National Oil Company 
 
The Japan Bank for International Cooperation (JBIC) will extend 
an advance payment loan of three billion dollars to the Abu 
Dhabi National Oil Company (ADNOC) for infrastructure, oil 
exploration and increased oil production according to JBIC 
officials.  The loan, estimated to be the largest ever granted 
by JBIC, will allow Japanese oil companies access of up to 
120,000 barrels of crude oil per day over a five-year or longer 
period.  The deal is the result of an MOU signed between JBIC 
and ADNOC during former Prime Minister Abe's visit to the UAE 
in April 2007.  In addition to these latest monies, JBIC and 
other banks will also extend $2.2 billion in loans to finance a 
power and water desalination plant in Abu Dhabi.  This will 
bring Japan's total commitments to the Emirates in this year 
alone to over five billion dollars.  Japan currently imports 
approximately one-third of its oil from the UAE.  (ECON:  Sally 
Behrhorst/Eriko Marks) 
 
¶20.  (U) Japan Firms Ink Nuclear Energy Deal with Kazakhstan 
 
Sumitomo Trading Company and Kansai Electric Power Co. signed a 
deal December 26 with Kazakhstan's state-run energy company, 
Kazatomprom, to process uranium for power generation. 
 
Under the deal, Kazatomprom will reconvert enriched uranium 
into powder at a nuclear fuel facility in Kazakhstan. 
 
Kansai Electric and Sumitomo will provide expertise and funding 
for necessary modifications to the plant which is capable of 
producing nearly twice as much nuclear fuel as Japan's current 
needs. 
 
The companies released no financial information on the deal, 
but Nikkei estimates upgrades to the processing plant alone at 
Y70 - Y80 billion ($615 - $700 million). 
 
The move is part of Japan's larger effort to forge closer ties 
with uranium-rich Kazakhstan to reduce dependence on Middle 
Eastern oil.  Several other deals have been inked since 
Junichiro Koizumi became the first Japanese Prime Minister to 
visit Kazakhstan in August 2006.  (ECON: Sally Behrhorst) 
 
---------------------------- 
NOVA ENGLISH SCHOOL TROUBLES 
---------------------------- 
 
¶21.  (SBU) G.communication Chair Inayoshi Comments on NOVA 
Acquisition 
 
Nagoya-based G.communication will not be able to fulfill its 
November promise to hire all former NOVA employees and reopen 
branches nationwide. 
 
On December 27, Nagoya-based G.communication Chair Masaki 
Inayoshi told us, as of December 24, sub-unit G.education's 
buyout of bankrupt NOVA extended to only 126 of the 200 schools 
it previously said it would acquire.  Inayoshi would prefer to 
hire all former NOVA employees with satisfactory performance 
records, but his financial backers do not consider such a broad 
move financially responsible.   He indicated G..education is 
having difficulties reopening former NOVA branches in some 
areas due to disagreements with landlords about rent arrears. 
Inayoshi believes NOVA's failure was primarily the result of 
its long-term payment program in which students paid a lump sum 
between 500,000 and one million yen per year for "NOVA points" 
that could be exchanged for future class time.  By shortening 
 
TOKYO 00005689  009 OF 010 
 
 
the prepayment time to one month, G.education will be able to 
provide courses and maintain financial and operational 
stability. 
 
To attract former NOVA students, G.education will offer a 75 
percent discount for holders of NOVA class points.  (Nagoya: 
Jonas Stewart/Tamiki Mizuno) 
 
---------- 
ROYAL NEWS 
---------- 
 
¶22.  (U) Emperor's 74th Birthday (U) 
Japan's Emperor Akihito and members of the royal family greeted 
thousands of well-wishers at the Imperial Palace as they 
celebrated his 74th birthday on December 23, 2007. 
 
------ 
SPORTS 
------ 
 
¶23.  (U) New Crop of Japanese Players to Spice up Majors in 
2008 
 
With the 2007 transfer season now more or less over, another 
class of top-notch Japanese baseball players have moved to the 
major leagues. 
 
Top of the list are four veteran pitchers, three of whom have 
recent Japan Series experience or were part of the Japan 
National Team that won the 2006 World Baseball Classic.  Unlike 
in previous years, this year's migrants all came via free- 
agency and not the expensive (for U.S. teams, at least) posting 
system that brought Red Sox star Daisuke Matsuzaka to Boston 
this year. 
 
Meanwhile, three Japanese major leaguers, all World Series 
veterans, jumped to new teams in the off-season.  As a result 
of all these moves, more American fans than ever before will 
have the chance next season to witness first hand the high 
caliber of current Japanese play. 
 
The chart below lists the Japanese players who signed new 
contracts this off-season, their likely positions next season, 
and their new and former teams.  (ECON: David DiGiovanna) 
 
Name/Age    Position  New Team  Fmr. Team 
Masahide KOBAYASHI, 33 RHP (r),  Cleveland, Lotte Marines 
Yasuhiko YABUTA, 34 RHP (r), Kansas City, Lotte Marines 
Kazuo FUKUMORI, 31 RHP (r), Texas, Rakuten 
Hiroki KURODA, 32 RHP (s) Los Angeles (NL), Hiroshima 
Kosuke FUKUDOME, 30 CF, Chicago (NL), Chunichi 
Kazuo MATSUI, 32 2B, Houston, Colorado 
Tadahito IGUCHI, 33 2B  San Diego,  Philadelphia 
So TAGUCHI, 38 CF/LF,  Philadelphia,  St. Louis 
 
¶24.  (U) Long Suffering Red Sox Fans Finally Have Something to 
Divert Attention 
 
It has been a long slog for Red Sox fans in Tokyo.  Two full 
months have passed since they watched their team wrap up their 
second World Series title in four years.  The days have grown 
shorter and the temperatures have slipped downward. 
 
Other than watch Daisuke Matsuzaka and Hideki Okajima appear 
endlessly on silly TV talk and game shows, the only solace for 
long suffering members of Red Sox Nation is to turn to football. 
 
The New England Patriots are poised to finish a perfect regular 
season on December 30 (Tokyo time), but there are no Japanese 
players on the Patriots' roster -- therefore, no live coverage 
on nationwide television in Japan. 
 
NBA basketball is on Japan's airwaves.  The Celtics may have 
the best record in the league, but--after watching the Red Sox 
sweep eight straight World Series games and the Patriots win 15 
straight--can Japan's Red Sox fans find solace slumming it 
with a team that's only 24-3?   (ECON:  Nicholas Hill) 
 
¶25.  (SBU) THIS WEEK'S CABLES 
5670 Fukuda's Visit to China 
5655 DNSA Price Engages Japanese on Doha, Beef, China and 
 
TOKYO 00005689  010 OF 010 
 
 
Climate 
5644 Japan Donates to Peacekeeping Efforts in Eastern Chad 
5629 Beef 
 
¶26.  (U) This SENSITIVE BUT UNCLASSIFIED e-newsletter from U.S. 
Embassy Tokyo's Economic Section, with contributions from the 
consulates, is for internal USG use only.  Please do not 
forward in whole or in part outside of the government.  The 
Scope is edited this week by Charlotte Crouch 
(CrouchCA@state.gov) and Joy Progar (ProgarJ@state.gov). 
Please visit the Tokyo Econ Intranet webpage for back issues of 
the Scope.  Apologies, this option is only available to State 
users.  Please contact Joy Progar if you are from a different 
agency and are interested in a back issue. 
DONOVAN