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RUCNDT/USMISSION USUN NEW YORK 3920

UNCLAS SECTION 01 OF 09 TOKYO 000447 
 
SIPDIS 
 
DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA; 
WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST DIVISION; 
TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS OFFICE; 
SECDEF FOR JCS-J-5/JAPAN, 
DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA 
FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR; 
CINCPAC FLT/PA/ COMNAVFORJAPAN/PA. 
 
E.O. 12958: N/A 
TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA
 
SUBJECT:  DAILY SUMMARY OF JAPANESE PRESS 02/27/09 
 
INDEX: 
 
Alliance issues: 
1) Prime Minister Aso in Diet reply says that disputed Senkaku 
Islands are subject to the U.S.-Japan security arrangements 
(Sankei) 
2) China, which also claims the Senkakus, protests Aso statement on 
the islands being subject to security arrangements with the U.S. in 
a contingency  (Nikkei) 
3) U.S. government, when asked by Japan, vague about defending 
Senkaku Islands during contingency  (Yomiuri) 
4) Defense Ministry considering intercept of North Korea missile if 
it heads towards Japan  (Sankei) 
5) North Korea strengthening ties with Iran on missile technology, 
focusing on Taepodong-2  (Sankei) 
 
Ozawa the strategist: 
6) Statement by Democratic Party of Japan (DPJ) President Ozawa 
about  presence of most U.S. troops in Japan not needed is still 
causing an uproar  (Tokyo Shimbun) 
7) Prime Minister Aso on Ozawa's statement: He has no knowledge of 
defense affairs  (Tokyo Shimbun) 
 
8) Japan to provide Gaza area with 19.5 billion yen in 
reconstruction assistance  (Mainichi) 
 
Political agenda; 
9) Fiscal 2009 budget bill to pass the Lower House today  (Tokyo 
Shimbun) 
10) Aso orders delay in requesting extra stimulus package in order 
to avoid clash with ongoing budget deliberations  (Nikkei) 
11) LDP bigwig Hidenao Nakagawa absents himself from meetings of his 
faction for three weeks  (Nikkei) 
 
12) U.S. expecting Japan to purchase Treasury bonds that will back 
President Obama's stimulus package  (Tokyo Shimbun) 
 
13) Japan Fair Trade Commission readying amendment to the 
Anti-Monopoly Act that would toughen system of penalties  (Mainichi) 
 
 
Articles: 
 
1) Aso: Japan-U.S. security treaty covers Senkaku Islands 
 
SANKEI (Page 5) (Excerpts) 
February 27, 2009 
 
Prime Minister Taro Aso said in a House of Representatives Budget 
Committee meeting yesterday: "Since the Senkaku Islands are Japan's 
inherent territory, the Japan-U.S. security treaty covers them." He 
made this remark in response to a request by Democratic Party of 
Japan Deputy President Seiji Maehara that the government should ask 
the U.S. about whether the islands are covered by the treaty. 
 
Aso also said, keeping in mind his conversation with U.S. President 
Barack Obama when they met on the 24th: "The Japan-U.S. alliance is 
a living entity. We must continue efforts to prevent the alliance 
from becoming useless during a contingency." 
 
2) China refutes Aso's remark defining Senkaku Islands as covered by 
Japan-U.S. security treaty 
 
TOKYO 00000447  002 OF 009 
 
 
 
NIKKEI (Page 2) (Full) 
February 27, 2009 
 
Ken Sato, Beijing 
 
In reaction to Prime Minister Taro Aso's statement that "the 
Japan-U.S. security treaty will cover the Senkaku Islands (the 
Diaoyutai Islands)" when they are invaded by an enemy, the Chinese 
Foreign Ministry spokesman issued this statement: 
 
"We express our strong dissatisfaction. The Diaoyutai Islands are 
China's inherent territory. From the broad standpoint of stable 
bilateral relations, Japan should be careful about what it does and 
says." 
 
3) U.S. avoids specifying "defend Senkaku Islands," in response to 
Japan's call for confirmation after Chinese ship's intrusion into 
Japanese waters 
 
YOMIURI (Page 2) (Full) 
February 27, 2009 
 
Satoru Ogawa, Washington 
 
The U.S. government has avoided confirming its conventional view 
that "the Japan-U.S. security treaty is applicable to the Senkaku 
Islands," according to informed sources yesterday. Japan asked the 
U.S. to confirm it after a Chinese oceanographic ship intruded into 
Japanese territorial waters in the southeast of the islands in early 
December of last year. The Japanese government analyzes that the 
U.S. side has made a minimal level of reply because the government 
is now in the transitional period. Considering that the U.S. might 
be taking such a stance because responsible officials have yet to be 
appointed, the government intends to ask the U.S. side to confirm it 
as soon as official appointments are made for the posts of assistant 
secretary at the State Department and the Defense Department. 
 
Some speculate U.S. consideration to China 
 
Washington has taken the position of maintaining neutrality without 
intervening in the issue of sovereignty over the Senkaku Islands. 
However, in 1996, then Deputy Assistant Secretary of Defense Kurt 
Campbell under the Democratic Clinton administration indicated -- 
the first time for a high-ranking U.S. official to do so -- that the 
security treaty covers the Senkaku Islands and that the U.S. is 
obligated to defend Japan during a contingency. 
 
When Chinese activists landed on the islands in March 2004, during 
the first-term Republic Bush administration as well, the deputy 
spokesman of the State Department said in a press conference: "The 
U.S.-Japan security treaty is applicable to areas under the 
administration of Japan, so the treaty covers the Senkaku Islands." 
 
The State Department, however, in response to Japan's request for 
confirming this conventional view, replied last December: 
"Territorial issues should be settled between the parties concerned 
in a peaceful manner." In replying to written requests by the 
Yomiuri Shimbun, the department would only state: "The U.S. abides 
by international agreements. The U.S. policy stance remains 
consistent." 
 
 
TOKYO 00000447  003 OF 009 
 
 
A senior Foreign Ministry official commented: "The U.S. government, 
in a move to strengthen relations with China, might be giving 
priority to diplomatic consideration to that nation." In meeting 
with Prime Minister Aso on Feb. 24, however, President Barack Obama 
reaffirmed his administration's commitment to defending Japan. 
Keeping this in mind, the Japanese government intends to cope with 
the matter in a cool-headed manner. 
 
Aso said in a House of Representatives Budget Committee meeting 
yesterday: "Since the Senkaku islands are an inherent part of Japan, 
the Japan-U.S. security treaty covers them." He then emphasized he 
would ask the U.S. to confirm this once again. 
 
4) Defense Ministry mulls shooting down N. Korean missile 
 
SANKEI (Top play) (Abridged) 
February 27, 2009 
 
The Defense Ministry has now begun studying plans to mobilize the 
Self-Defense Forces' missile defense (MD) system and intercept an 
advanced model of the Taepodong 2, a North Korean long-range 
ballistic missile, should North Korea launch the missile at Japan, 
sources said yesterday. Intercepting it would be the Standard 
Missile 3 (SM-3), a sea-based intercept missile mounted on 
Aegis-equipped destroyers, and the Patriot Advanced Capability 3 
(PAC-3), a land-based ground-to-air guided missile. The MD system 
would be actually used for the first time since its introduction. 
However, intercepting requires a grave political decision. The 
Defense Ministry will therefore coordinate carefully with the prime 
minister's office. 
 
The government decided in 2003 to introduce the U.S.-developed MD 
system. MD counteraction is a double-decker system. First and 
foremost, a Maritime Self-Defense Force Aegis ship launches an SM-3 
missile to shoot down a ballistic missile in outer space. In case 
the SM-3 fails to hit the missile, the Air Self-Defense Force will 
back up to intercept the missed target with its ground-based PAC-3 
missile. 
 
The MSDF currently stages two SM-3 capable Aegis destroyers. One is 
the Kongo, which was deployed in 2007, and the other one is the 
Chokai, which came on in 2008. The ASDF also introduced the PAC-3 to 
its Iruma base in Saitama Prefecture in March 2007. Beginning with 
this introduction, the ASDF has now completed PAC-3 deployment to 
four bases in the metropolitan area. In addition, the ASDF also 
deployed the PAC-3 to its Gifu base yesterday. 
 
The Kongo test-launched an SM-3 missile in waters off Hawaii in 
December 2007, and the test was successful. However, the Chokai 
failed in an even more difficult test that was conducted in November 
last year. The ASDF test-launched a PAC-3 missile in the U.S. 
mainland state of New Mexico in September last year for the first 
time and successfully hit a mock-up projectile. 
 
In July 2006, North Korea launched seven ballistic missiles, 
including a Taepodong-2 missile. At that time, the SDF had no 
intercept system. The Kongo and the Chokai were also in the Sea of 
Japan and on the Pacific side, but they were only tasked with 
detecting and tracking ballistic missiles. 
 
To intercept the enhanced Taepodong-2 missile, the government will 
for the first time invoke an action, newly stipulated in the SDF law 
 
TOKYO 00000447  004 OF 009 
 
 
with the MD system being introduced, to destroy ballistic missiles 
and other projectiles. 
 
The action for missile destruction is to be taken in two cases: 1) 
if there are such pre-launch signs as fuel injection, the defense 
minister, with the prime minister's approval, will order the SDF to 
intercept; and 2) when it is necessary to watch out for missile 
testing or other eventualities even though there are no definite 
signs, the defense minister will have Aegis vessels and other SDF 
systems prepositioned to intercept in conformity with a prepared 
outline of countermeasures for emergencies. 
 
5) N. Korea strengthens missile ties with Iran 
 
SANKEI (Page 5) (Abridged) 
February 27, 2009 
 
North Korea is now preparing to launch an "artificial satellite" 
believed to be an advanced model of the Taepodong 2, a long-range 
ballistic missile. In connection with this project, North Korea has 
sent missile development researchers to Iran several times in order 
to deepen mutual exchanges with Iran on missile technology since 
Japan invoked sanction measures against North Korea in July 2006, 
the Sankei Shimbun learned yesterday from sources familiar with 
military affairs between Japan and the United States. Observers say 
North Korea sent those researchers to Iran for such purposes as 
acquiring that country's technical know-how for satellite delivery 
vehicles and missiles in order for North Korea to develop 
longer-range missiles. As another likely reason, it has become even 
more difficult than before to secure machinery parts and military 
potential materials. 
 
Meanwhile, the new Taepodong-2 missile has yet to be set on a launch 
pad at Musudanri in North Korea's northeastern province of North 
Hamkyong. However, the projectile was placed beside the launch pad 
yesterday, according to a source familiar with military affairs 
between Japan and the United States. "The missile can be raised and 
fueled in a single day," the source said. North Korea is now about 
to complete its readiness to launch the missile. 
 
Iran and North Korea have been cooperating with each other as 
Iranian nuclear development researchers have visited North Korea and 
North Korea has sold missile-related parts to Iran. Iran has denied 
the existence of any military relations with North Korea. However, 
the two countries' technical cooperation has been continuing behind 
the scenes. Their nuclear-related technologies might have improved 
markedly. 
 
6) Government and ruling parties explode over Ozawa's remark about 
only needing U.S. 7th Fleet to defend Japan 
 
TOKYO SHIMBUN (Page 2) (Full) 
February 27, 2009 
 
The Aso administration went on the attack yesterday against 
Democratic Party of Japan (DPJ) President Ichiro Ozawa for his 
statement that in stationing U.S. forces in Japan, "the presence of 
the 7th Fleet would be enough." The aim was to raise doubts about 
the capability of the DPJ to administer the country if it is to 
destabilize the Japan-U.S. alliance, as well as to unsettle the 
united front of the opposition parties. 
 
 
TOKYO 00000447  005 OF 009 
 
 
Chief Cabinet Secretary Takeo Kawamura told the press corps, "His 
thinking about limiting the presence of the U.S. forces to the 7th 
Fleet is unrealistic." 
 
In meetings yesterday, every faction of the Liberal Democratic Party 
(LDP) showered Ozawa with a rain of criticism, with former LDP Vice 
President Taku Yamasaki of the Yamasaki faction saying, "If an 
Ozawa-led DPJ administration were to become a reality, Japan's 
national security would be shaken to its very foundation. The 
Japan-U.S. alliance would start to fall apart." 
 
Former Chief Cabinet Secretary Nobutaka Machimura of the Machimura 
faction, in addition to advocating that the Ozawa statement be made 
a campaign issue in the next Lower House election, said, "I would 
like many in the local areas to say what kind of irresponsible 
foreign and national security policy this is." 
 
The Ozawa statement premised a massive reduction of the U.S. forces 
stationed in Japan and in turn, Japan shouldering some of that role. 
If the gap created by the departing U.S. forces is to be filled, 
Japan would have to increase its defense power. This point, too, 
received criticism, with Machimura stating, "There would be momentum 
building to increase the defense budget three to five times, but 
such would be reckless debate." 
 
Former Finance Minister Fumiaki Ibuki said, "I wonder if the Social 
Democratic Party (SDP) will go along with this concept and cover the 
increase in Japan's defense power." He sought to arouse the SDP, 
which will be cooperating with the DPJ in the next Lower House 
election. 
 
7) Prime Minister Aso: Ozawa lacks knowledge of defense 
 
TOKYO SHIMBUN (Page 2) (Full) 
February 27, 2009 
 
Prime Minister Aso last evening criticized Democratic Party of Japan 
(DPJ) President Ichiro Ozawa for his remark about the 7th Fleet of 
the U.S. Navy being enough (to defend Japan). In a reply to a 
question from the press corps, he said, "A person with knowledge of 
defense would never make such a remark." The Prime Minister pointed 
out: "Japan has neighboring it a country that tests nuclear weapons, 
that is ready to launch (nuclear-tipped) missiles called the Nodong. 
If one thinks about Japan's security, the air power (of the U.S. 
armed forces) is a vital element." 
 
8) Japan to provide 19.5 billion yen in assistance for 
reconstruction efforts in Gaza Strip 
 
MAINICHI (Page 2) (Full) 
February 27, 2009 
 
Mainichi Shimbun learned on February 26 through a government source 
that the Japanese government is now coordinating an announcement 
that it will provide roughly 200 million dollars or about 19.5 
billion yen. The aid will be announced at a conference on assistance 
for the reconstruction of the Gaza Strip to be held in Egypt on 
March 2. Japan has already extended emergency financial assistance 
worth 10 million dollars or roughly 980 million yen to the Gaza 
Strip. 
 
The conference will be joined by about 70 countries, including the 
 
TOKYO 00000447  006 OF 009 
 
 
U.S. and European and Middle Eastern countries. Participants will 
confer on how to share the cost of reconstructing public facilities 
destroyed in attacks by the Israeli military -- 2.8 billion dollars 
or about 273 billion yen. Senior Vice Foreign Minister Shintaro Ito 
will likely attend the meeting from Japan. Secretary of State 
Clinton will attend from the U.S. She is expected to announce that 
the U.S. will disburse 900 million dollars or about 88 billion yen. 
 
9) Fiscal 2009 budget to clear Lower House today 
 
TOKYO SHIMBUN (Page 2) (Full) 
February 27, 2009 
 
The fiscal 2009 budget and related bills will clear the House of 
Representatives today after they are adopted in a Lower House 
plenary session this afternoon. Before they are sent to the plenary 
session, they will be approved the Lower House Budget Committee, 
Financial Affairs Committee and Internal Affairs Committee. Based on 
a constitutional rule, the budget and related bills will be enacted 
before the March 31 end of current fiscal year. 
 
In a meeting yesterday of the House of Councillors Diet affairs 
chiefs, the ruling Liberal Democratic Party (LDP) and main 
opposition Democratic Party of Japan (DPJ) agreed to take a vote on 
bills related to the second supplementary budget for fiscal 2008, 
designed to secure funds for the cash-hand out program, on March 3 
in Financial Affairs Committee session and Upper House plenary 
session on March 4. The bills will be voted down by a majority of 
lawmakers from the opposition parties. The ruling coalition is 
expected to hold a Lower House plenary session as early as March 4 
to readopt them with a tow-thirds override vote. 
 
The Upper House Budget Committee agreed in a meeting of its 
directors to carry out a question-and-answer session on March 5 and 
6 at the attendance of Prime Minister Taro Aso. In order to enact 
the fiscal 2009 budget and related bills before the end of current 
fiscal year, the ruling parties will ask the opposition camp to take 
a vote as early as possible. 
 
10) Prime Minister Aso delays order to look into additional economic 
package to avoid impact on budget deliberations 
 
NIKKEI (Page 2) (Full) 
February 27, 2009 
 
Although the government is actually working on drafting up 
additional economic stimulus measures, Prime Minister Taro Aso will 
likely put off to next week or later ordering senior ruling 
coalition members to consider such a package. The Prime Minister 
originally planned to give that order immediately after the fiscal 
2009 budget and related bills are passed in the House of 
Representatives. However, the House of Councillors is still 
deliberating bills related to the second supplementary budget for 
fiscal 2008. Aso will forgo giving the order until after the related 
bills are readopted with a two-thirds lower chamber majority 
override vote. 
 
Aso had intended to order to senior ruling camp officials the 
planning of the additional economic stimulus package soon after the 
fiscal 2009 budget cleared the Lower House on Feb. 27. Chief Cabinet 
Secretary Takeo Kawamura took a cautious stance toward Aso's plan at 
a press conference yesterday. He stated: "We must hurry the passage 
 
TOKYO 00000447  007 OF 009 
 
 
of the fiscal 2008 second extra budget and related bills. We will 
concentrate on that." 
 
In managing Diet affairs, there is a risk in compiling an additional 
economic package now. The reason is because compiling another 
economic package means that the government and ruling parties admit 
that the fiscal 2009 budget is insufficient. This, as a result, 
would give the opposition camp a good cause to demand corrections 
and re-submission. In order to avoid such a situation, Aso has to 
continue saying that he has yet to give an order. 
 
Aso is playing it safe. He has decided to wait until the fiscal 2009 
budget is adopted by the Lower House, which means the budget is 
certain to be enacted. He will then give the order to compile the 
additional economic package, directing it to senior ruling coalition 
members instead of his cabinet ministers. 
 
The miscalculation was the bills related to the fiscal 2008 second 
extra budget including fiscal resources for the cash-handout 
program. Although the second supplementary budget itself cleared the 
Diet in late January, passage of the related bills has been delayed 
due to confrontation between the ruling and opposition camps. 
Following former Prime Minister Junichiro Koizumi, who revealed his 
intention to absent himself from voting in the Lower House, other 
Liberal Democratic Party (LDP) lawmakers might defy the party. 
 
Judging that barriers against the fiscal 2008 second budget related 
bills are high, Aso decided to give the order after the related 
bills were readopted in the Lower House. The present situation of 
the Aso administration, which needs to give consideration not only 
to the opposition camp but also to the ruling parties, has put off 
efforts to come up with an additional economic package. 
 
11) Hidenao Nakagawa absents himself from attending Machimura 
faction meetings 
 
NIKKEI (Page 2) (Full) 
February 27, 2009 
 
The Machimura faction, the largest in the ruling Liberal Democratic 
Party (LDP), is now pushing ahead with a review of its management 
system. Former Prime Minister Yoshiro Mori, who had announced his 
intention to leave the faction, attended a meeting on Feb. 5 for the 
first time in three weeks. Former Secretary General Hidenao 
Nakagawa, however, has failed to attend the faction's meeting for 
three weeks. With a move to exclude Nakagawa from the mainstream, 
some faction members are growing dissatisfied with the leadership. 
 
Nobutaka Machimura, chair of the faction, introduced Mori with a 
smile in a meeting yesterday, saying: "It is not that he left our 
faction but he was unable to show up on account of some business." 
Mori is expected to attend faction's meetings from now on, changing 
his present title as supreme advisor to the faction. 
 
Mori proposed in a meeting on Feb. 5 that Machimura head the faction 
and Nakagawa be demoted. Faced fierce opposition from faction 
members close to Nakagawa, Mori revealed his intent to leave the 
faction in order to put the turmoil behind him. 
 
Meanwhile, Nakagawa has not attended meetings since the Feb. 5 
meeting. Machimura told reporters yesterday: "I have often asked Mr. 
Nakagawa to attend, but he appears to be busy." Mori's return to the 
 
TOKYO 00000447  008 OF 009 
 
 
faction appears to have given strong backing to Machimura. One 
lawmaker close to Nakagawa said: "Mr. Mori's influence will not 
continue forever. Didn't he promise to leave the faction?" Some 
faction members criticize the Mori-Machimura management setup. 
 
12) U.S. President Obama submits budget message to Congress: 
Economic stimulus measures to rely on borrowing for time being; 
Purchases of Treasury bonds by Japan unavoidable 
 
TOKYO SHIMBUN (Page 8) (Full) 
February 27, 2008 
 
Masakazu Furukawa, Washington 
 
U.S. President Obama included a long-term fiscal reconstruction 
policy in the framework of the Budget Message for fiscal 2010 
(October 2009 - September 2010), which he submitted to Congress on 
February 16. In reality, however, the U.S. has to rely on the 
issuance of Treasury bonds to finance its economic stimulus package 
for the time being. Japan will likely be asked to purchase a massive 
amount of U.S. Treasury bonds. 
 
Even though President Obama has so far recognized the need for 
fiscal reconstruction, he noted that it was necessary to increase 
public spending for economic recovery for the time being. Based on 
that stance, he has been seeking understanding of a temporary 
expansion of the fiscal deficit. 
 
However, an expanded fiscal deficit will trigger a drop in the value 
of the dollar, rocking confidence in the greenback as the 
international key currency. If a weak dollar trend continues, prices 
of such commodities as crude oil and grains, for which payments are 
made in dollars, could soar, giving rise to global inflation. A fall 
in the value of the U.S. Treasury bonds, which the governments of 
many countries and major central banks have purchased as secure 
assets, would be a serious blow. 
 
It is imperative for Japan to help the U.S. reconstruct its economy. 
That is because the sluggish U.S. economy as well as a weak dollar 
and a fall of the U.S. Treasury bonds will deal a blow to the 
Japanese economy, as well. Prime Minister Taro Aso during a press 
conference after the bilateral summit in Washington on the 24th 
denied any request from the President to purchase U.S. Treasury 
bonds. However, in order to reconstruct the Japanese economy, too, 
Japan now has no other choice but to purchase U.S. government 
bonds. 
 
13) Administrative surcharge system to be toughened: FTC releases 
draft amendment to Anti-Monopoly Law 
 
MAINICHI (Page 2) (Full) 
February 27, 2009 
 
The Fair Trade Commission (FTC) on February 26 released a draft 
amendment to the Anti-Monopoly Law. The amendment features an 
expanded scope of the application of administrative surcharges 
imposed on irregularities, as well as toughened penalties, such as 
increasing administrative surcharges imposed on companies that 
played a leading role in bid-rigging activities (dango) to 50 
PERCENT . The Commission plans to submit it to the Diet after 
securing approval at a cabinet meeting on the 27th and put it into 
force starting next spring at the earliest. 
 
TOKYO 00000447  009 OF 009 
 
 
 
This is the first amendment to the law since 2005. The key element 
of the draft is a review of the administrative surcharge system. 
Under the amended law, dumping, the abuse of dominant bargaining 
position against subcontractors and exclusive private 
monopolization, which refers to exclusion of competitors from the 
market, using unlawful means, will be subject to surcharges. 
 
Since there is no end to cartels and bid-rigging activities, the FTC 
will reinforce the administrative surcharge system, by increasing 
surcharges on companies that played a leading role in those 
activities and exempting or reducing surcharges on companies that 
voluntarily submitted information on their illegal trade practices 
before coming under scrutiny. Such surcharges on major manufacturers 
will be increased from the current 10 PERCENT  to 15 PERCENT . A 
prison term sentenced to individuals will be raised from "three 
years or less" to "five years or less." 
 
An additional rule stipulating that the judgment system, under which 
the FTC decides the propriety of administrative punishments it 
imposed, should be reviewed within fiscal 2009 has also been set up. 
The FTC submitted in March last year an amendment bill that included 
an additional rule stipulating that the system should be reviewed 
within fiscal 2008. However, the bill was scrapped, faced with 
opposition from the Democratic Party of Japan, which insists on the 
total abolition of the system. 
 
ZUMWALT