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FM AMEMBASSY TOKYO
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RUEHUL/AMEMBASSY SEOUL 3011
RUCNDT/USMISSION USUN NEW YORK 3074

UNCLAS SECTION 01 OF 06 TOKYO 003521 
 
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 12/30/08 
 
Index: 
 
Defense and security affairs: 
1) Government plans to dispatch several MSDF officers to work at 
U.S. led piracy mop-up command to be established next spring 
(Sankei) 
2) China to start building two aircraft carriers next year; Seen as 
the start of its expansion of sea power in the region  (Asahi) 
 
3) LDP's Koichi Kato, Taku Yamasaki may bolt LDP to form new party, 
with formation of study group as initial stage next month  (Yomiuri) 
 
 
Economy in trouble: 
4) Direct foreign investment in Japan plunged 40 PERCENT  during 
April-October period as overseas investors turned inward, hurt by 
the financial crisis  (Nikkei) 
5) Government, Bank of Japan considering restarting the purchasing 
of non-performing loans from hard-pressed financial institutions 
(Sankei) 
6) Government planning IT strategy to create jobs, focusing on 
emergency 3-year plan that will start next month  (Nikkei) 
 
7) Japan's diplomacy to be tested as it seeks to capture lead in 
post-Kyoto Protocol agreement to reduce global warming  (Tokyo 
Shimbun) 
 
8) Japan does not intend to join IRENA, new renewable energy agency, 
judging that it overlaps with the IEA  (Yomiuri) 
 
Articles: 
 
1) Gov't to send MSDF officers to antipiracy command 
 
SANKEI (Page 1) (Abridged) 
December 30, 2008 
 
The government decided yesterday to participate in a contact group 
(CG) that will serve as an anti-piracy headquarters, which will be 
set up as early as next spring under the United States' initiative 
against pirates who are rampant off the coast of Somalia in Africa. 
The CG is expected to locate its office in Bahrain, where the U.S. 
Navy's 5th Fleet is headquartered. The government is considering 
sending several Maritime Self-Defense Force officers to the CG 
office. The sea off the Somalia coast is a hot spot for piracy, and 
the security of sea lanes there is critical for Japan's imports of 
crude oil. The government therefore judged that Japan should take a 
proactive role in operations to mop up the pirates there. 
 
The CG will serve as an international cooperation mechanism for 
multilateral naval forces and international organizations, including 
the United States and Britain, to share intelligence and coordinate 
activities. Prime Minister Taro Aso will meet with U.S. Secretary of 
State Rice, who is scheduled to visit Japan early in January next 
year, and in their meeting, Aso will tell Rice that Japan will send 
MSDF destroyers and will also participate in the CG from the start. 
 
The United Nations Security Council met on Dec. 16 and unanimously 
adopted Resolution 1851 to allow military operations in Somalia and 
in its territorial airspace. The UNSC resolution proposes setting up 
an international cooperation mechanism among various countries and 
relevant organizations for every aspect of antipiracy measures. The 
 
TOKYO 00003521  002 OF 006 
 
 
U.S. government intends to weigh coordination in the CG for naval 
operations and is seeking participation from merchant shipping and 
insurance companies that have information about shipping services. 
 
In the international community's antipiracy efforts off Somalia, a 
total of 15 countries have already dispatched naval vessels. In 
addition to the United States, Russia is also conducting naval 
activities there to watch out for pirates. A European Union fleet is 
also on a mission, following the North Atlantic Treaty Organization 
(NATO). China has also sent three naval vessels. 
 
In this connection, the government will send personnel from the 
Foreign Ministry and the Land, Infrastructure and Transport Ministry 
to an international conference of the International Maritime 
Organization (IMO), which will be held in Djibouti, Africa, from 
Jan. 26 next year. On that occasion, Japan will announce its plan to 
cooperate with a piracy intelligence sharing center, which is being 
planned by 21 countries around Somalia. The center is modeled after 
a multilateral mechanism under the Asia Antipiracy Regional 
Cooperation Agreement, which came into effect in 2006 under Japan's 
initiative against pirates in the Straits of Malacca. It is for 
neighboring countries to share information about suspicious ships 
and pirate attacks. 
 
2) China to build flattops for 1st time 
 
ASAHI (Top play) (Abridged) 
December 30, 2008 
 
BEIJING-The Chinese military will begin in 2009 to build aircraft 
carriers in Shanghai for the first time and will complete two 
midsize carriers weighing 50,000-60,000 tons by 2015, according to 
military and shipbuilding company sources. In addition, the Varyag, 
a Soviet-made 60,000-ton aircraft carrier, which is currently moored 
in the port of Dalian, Liaoning, will shortly complete its 
renovation and is expected to be recommissioned for training 
purposes. Carrier-borne aircraft pilot training has also begun. 
 
Recently, Huang Xueping, a spokesman for the Chinese Defense 
Ministry, referred to the possibility of building aircraft carriers. 
His positive remarks drew various countries' attention. However, 
this is the first time that the plan has been unveiled. China's 
flattop deployment will enhance its naval power projection. In that 
case, it will likely affect the military balance in East Asia. 
 
A step to swing strategy for sea interests 
 
Takushoku University Professor Ikuo Kayahara, former chief 
researcher at the National Institute for Defense Studies (NIDS), 
says: "Aircraft carriers are the pillars for the Chinese military to 
reinforce its naval forces. To begin with, it strongly means that 
China will try to expand the buffer zone in order to protect its 
coastal areas from the threat of the United States and secure its 
sea interests. This is the first step of a strategy for China to 
become a seafaring power swinging into the West Pacific." 
 
3) LDP's Kato, Yamasaki may form new party, splitting the party; 
Study group to be launched next month 
 
YOMIURI (Page 1) (Excerpts) 
December 30, 2008 
 
 
TOKYO 00003521  003 OF 006 
 
 
The Liberal Democratic Party (LDP) is being wracked by moves within 
the party that could lead to a split after New Year's, with some 
leaving the party and others possibly forming a new party. It is 
possible that former LDP Secretary General Yoichi Kato, former LDP 
Vice President Taku Yamasaki and others may form a new party prior 
to the next Lower House election, starting with the launching of a 
new study group possibly in January. In addition, some junior to 
mid-level LDP lawmakers, reacting sharply to the government's 
handling of the issue of turning highway-related revenues into 
general funds, are considering defying their party when relevant 
bills come up for a vote. On the Democratic Party of Japan (DPJ) 
side, as well, a stance has been taken to strengthen moves to 
encourage rebellion and defection from the LDP. Tension is expected 
to build in the regular Diet session that opens January 5 which 
could lead to political realignment. 
 
 The study group that Kato, Yamasaki and others plan to form is 
expected to have five to ten members, including LDP lawmakers, 
scholars, and academics. Its main theme will be, "What form Japan 
the state should take and what choices it should consider?"  It aims 
to consolidate forces with those who take a stance critical of the 
structural reform line, having raised the slogan, "Correct market 
fundamentalism that has gone too far." It is expected that some DPJ 
lawmakers will link up with the group, and that even the New Komeito 
may possibly seek to cooperate with it. 
 
4) Foreign direct investment for April-October period declines 40 
PERCENT ; Inflows in fiscal 2008 to mark yearly drop first time in 
five years 
 
NIKKEI (Top Play) (Excerpts) 
December 30, 2008 
 
The global financial crisis has applied the brakes to foreign direct 
investment (FDI) in Japan, including purchases and acquisitions of 
Japanese firms and establishment of branches in Japan. Investment 
inflows for the April-October period in 2008 plummeted 40 PERCENT 
below the same period a year ago. FDI is expected to mark the first 
year-on-year decline in fiscal 2008 since fiscal 2003. Foreign 
companies now tend to favor inward investment, given the weakening 
of their capital bases. Cases of companies withdrawing their 
presence or capital from Japan are expected to increase in the 
future. The reduction in capital inflows may be a further drag on 
the Japanese economy. 
 
According to statistics from the Finance Ministry and the Bank of 
Japan, foreign direct investment totaled 3.42 trillion yen for the 
April-October period, down 36 PERCENT  from the same period a year 
ago. In fiscal 2007, foreign investments came to about 9 trillion 
yen, or about 700 billion yen a month. But the figure for fiscal 
2008 has shrunk to about 300 to 400 billion yen a month since 
August. 
 
5) Government, BOJ eye resumption of purchase of nonperforming loans 
as early as in March 
 
SANKEI (Top Play) (Excerpts) 
December 30, 2008 
 
The government and the Bank of Japan (BOJ) are studying the 
possibility of introducing a new system to purchase wide-ranging 
financial assets, including nonperforming loans held by financial 
 
TOKYO 00003521  004 OF 006 
 
 
institutions, by using public funds, according to informed sources 
yesterday. They intend to revive and expand the measure that the 
government carried out through the Deposit Insurance Corporation 
(DIC) starting in fiscal 1999. The items subject to the measure will 
be expanded to cover debentures purchased by banks from customers, 
commercial paper (CP), stock holdings, and derivatives. The 
government intends to submit bills amending relevant laws to the 
ordinary Diet session, which opens early next year, work out 
details, and introduce the new system as early as late March. The 
total amount of purchases is estimated to reach roughly 10 trillion 
yen. 
 
Nonperforming loans are expected to significantly increase in the 
future given the rapidly worsening of the domestic economy. By 
enhancing banks' power with the new system covering wide-ranging 
financial assets, the government aims to ease their credit grip and 
help companies in raising funds. 
 
BOJ Governor Masaaki Shirakawa proposed the plan to resume 
purchasing financial assets to Finance Minister Shoichi Nakagawa in 
early December. Since then, study has been conducted behind the 
scenes. 
 
Under the measure taken since fiscal 1999, the DIC issued bonds with 
the government's guaranteeing of repayments as means to procure 
funds. The Resolution and Collection Corporation under the DIC 
purchased bonds and collected bonds. When losses were accrued, the 
losses were covered with tax money. 
 
The government and the BOJ are planning to revive a mechanism 
similar to this measure and increase items subject to the system. 
 
In resuming the purchase of financial assets, revising the Financial 
Reconstruction Law will be necessary. In the DIC, 52 trillion has 
been set aside to deal with financial institutions' failures for 
next fiscal year. The government will coordinate views on whether to 
use the 52 trillion yen or establish a new framework. 
 
6) IT strategy to focus on job creation 
 
NIKKEI (Page 2) (Abridged) 
December 30, 2008 
 
The government will launch a new information technology (IT) 
strategy in March next year to cope with the economic crisis. The 
new strategy, called an IT 3-year emergency plan, will set forth 
such measures as constructing an infrastructure for the broadband 
networking of public organizations and other end users, aiming to 
create new jobs and expand domestic demand. This is in response to 
Prime Minister Taro Aso's scenario for economic recovery in three 
years. In June next year, the government will also work out mid- and 
long-term IT strategies to push for a turnaround of the economy in 
full swing. 
 
The government will set up a special study group to discuss future 
IT strategies, involving local government leaders, university 
professors, business community representatives, and Internet 
providers. The study group will discuss the emergency plan and mid- 
and long-term strategies. In addition, the group will also submit a 
report of recommendations to Aso on ways to push for e-government. 
 
7) Japan's diplomatic skills to be tested in bringing about 
 
TOKYO 00003521  005 OF 006 
 
 
agreement on post-Kyoto mechanism 
 
TOKYO SHIMBUN (Page 2) (Full) 
December 30, 2008 
 
A decision has been made for a new international framework to be 
formed in 2009 to fight global warming, following the expiration of 
the Kyoto Protocol. But difficult negotiations are expected against 
the backdrop of the ongoing global economic crisis. Environment 
issues are within Japan's realm of expertise. Japan's diplomatic 
skills will be tested in the negotiations. 
 
Senior Foreign Ministry officials have cited the issue of climate 
change, as well as U.S. policy following the inauguration of the 
Obama administration, as major diplomatic tasks that Japan will face 
in 2009. 
 
Japan put forth the goal of halving global greenhouse gas emissions 
by 2050, as the chair of the Hokkaido Toyako Summit. Given this, 
Japan hopes to play up leadership in bringing about an agreement in 
the 15th session of the Conference of the Parties to the UN 
Framework Convention on Climate Change (COP15) to be held in 
Copenhagen late next year. 
 
But negotiations are unlikely to go smoothly. In the COP14 held in 
Poland, no agreement was reached as industrialized and developing 
countries remained at loggerheads. 
 
Developing countries want their burden to be reduced as much as 
possible, as seen from a call for 1990 to continue to be the 
benchmark year for emissions cuts. Some have suggested that only 
simple revisions be made to the Kyoto Protocol. 
 
Moreover, since curbing carbon dioxide (CO2) emissions will be a 
heavy burden for economically weak countries due to the ongoing 
economic crisis, these countries are putting up stiffer resistance. 
 
The Japanese government is preparing a "Cool Earth Partnership" 
system worth 10 billion dollars (approximately 900 billion yen) to 
offer non-reimbursable aid for developing countries' efforts to 
protect the environment. While continuing to exert influence over 
developing countries, the government wants to bring about a 
settlement in negotiations. 
 
Even so, one negotiator takes this view: "Although some are calling 
for setting several years as the benchmark years, stormy sessions 
are expected in the negotiations." 
 
A government source has already indicated a pessimistic prospect 
about an agreement in 2009, saying: "Negotiations might continue 
into 2010." 
 
8) Japan does not intend to join renewable energy agency, judging 
that it duplicates the IEA 
 
YOMIURI (Page 2) (Full) 
December 30, 2008 
 
The government yesterday decided not to join the International 
Renewable Energy Agency (IRENA), which will be launched next month 
with the aim of expanding the use of such energy sources as sunlight 
and wind. The reasons for not joining IRENA include the judgment 
 
TOKYO 00003521  006 OF 006 
 
 
that its function duplicates that of the International Energy Agency 
(IEA), in which Japan has an executive director's seat. However, 
some have pointed out their concern that Japan is likely to be 
criticized by the international community as turning its back on the 
environment problem. 
 
IRENA will be established with Germany as the central member. In 
order to deal with global warming and the exhaustion of supplies of 
fossil fuels, participating countries will promote such efforts as 
technology transfers related to renewable energy, capital 
procurement, and information exchanges. 
 
Japan has been asked repeatedly by Germany to join, but it has 
decided for the time being to put off joining, with one senior 
Foreign Ministry official criticizing, "The IEA is already tackling 
the problem of expanding the use of renewable energy, so another 
agency is not needed." There is also the possibility that Japan 
would be asked to provide several hundred million yen annually to 
help fund the agency. Being in the midst of a severe fiscal 
situation also has made Japan hesitant about joining. 
 
However, the IEA consists of 28 members that are mainly advanced 
industrial countries. In contrast, IRENA is expected to have the 
participation of dozens of countries including those from the 
developing world. Within the Japanese government there is the view 
of actively using IRENA, citing the challenge in measures to counter 
global warming of how to engage both the advanced countries and the 
developing countries at the same time. Some also have pointed out 
the benefits to Japanese companies that would accrue, with one 
government source saying, "If we join IRENA, it would be useful for 
the dissemination of Japanese technologies in such areas as solar 
power. 
 
The United States, too, has not been inclined to join IRENA, but 
President-elect Obama has stressed shifting from fossil fuels to 
renewable energy sources. So some Japanese officials expect that the 
U.S. policy may change with the new administration. 
 
ZUMWALT