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UNCLAS SECTION 01 OF 13 TOKYO 001368 
 
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 06/18/09 
 
Index: 
 
1) Top headlines 
2) Editorials 
3) Prime Minister's daily schedule  (Nikkei) 
 
Foreign and security affairs: 
4) Defense Ministry analysis: Next North Korean missile launch could 
be targeting Hawaii  (Yomiuri) 
5) LDP's foreign affairs panel presents list of policy proposals 
(Yomiuri) 
6) Next consul general for Okinawa: Not prepared to discuss 
relocation of Futenma base outside the prefecture, even if promoted 
by a DPJ administration (Ryukyu Shimpo) 
7) Prime Minister Aso denies press reports of existence of "secret 
agreement" with U.S. connected to the reversion of Okinawa to Japan 
(Tokyo Shimbun) 
8) Text of exchanges in one-on-one party heads debate on North Korea 
and security affairs  (Sankei) 
 
Political agenda: 
9) As Prime Minister Aso, Democratic Party of Japan President 
Hatoyama go one-on-one in Diet debate, Aso rapidly losing support of 
his party  (Asahi) 
10) Sagging badly in the polls, will Aso shuffle cabinet, delay 
timing of general election to October, or speed up the LDP 
presidential election?  (Nikkei) 
11) LDP trying to extinguish rumor that the July Tokyo assembly 
election will be a litmus test for Aso, resigning to take 
responsibility if the party suffers a big loss  (Yomiuri) 
12) Opposition camp is all fired up, expecting an early general 
election  (Yomiuri) 
 
Scandals: 
13) METI Minister Nikai is again under scrutiny for money links to 
corrupt construction company  (Akahata) 
14) DPJ lawmaker apparently involved in bureaucrat's welfare scam 
(Sankei) 
 
15) Finance Minister Yosano declares that the economy has bottomed 
out  (Mainichi) 
 
16) President of the Philippines Arroyo wants to strengthen the EPA 
with Japan  (Tokyo Shimbun) 
 
17) Beijing's plan to start construction of an oil and gas pipeline 
from Middle East across Burma (Myanmar) to China could adversely 
impact Japan's energy supply  (Sankei) 
Articles: 
 
1) TOP HEADLINES 
 
Asahi: 
Fever outpatient clinics to be discontinued in principle to prepare 
for second wave of new-strain influenza 
 
Mainichi: 
Minister Yosano declares bottoming out of economy; monthly report to 
delete word "worsening" 
 
Yomiuri: 
Defense Ministry analysis: DPRK's missile targeting Hawaii in early 
 
TOKYO 00001368  002 OF 013 
 
 
July may fly over Aomori 
 
Nikkei: 
Nine health care groups to merge corporate physical checkup 
operations 
 
Sankei: 
China starts construction of pipelines via Burma in September, may 
affect Japan reliant on Middle East oil 
 
Tokyo Shimbun: 
Succession in North Korea: Cable indicating third son "selected 
unofficially" sent to embassy in Beijing in May 
 
Akahata: 
Three tasks for JCP in new Diet session to increase its power, 
realize politics of hope 
 
2) EDITORIALS 
 
Asahi: 
(1) Aso vs Hatoyama: Take the debate promptly to the general 
election 
(2) U.S.-ROK talks: Building the foundation level-headedly is most 
important 
 
Mainichi: 
(1) Party leaders' debate: Lack of ardor befitting "eve of the 
showdown" 
(2) Economy bottoming out: No peace of mind yet in people's lives 
 
Yomiuri: 
(1) Party leaders' debate: Prime Minister's explanation on Japan 
Post unconvincing 
(2) U.S.-ROK summit: How to repel the North's provocation 
 
Nikkei: 
(1) Do not let up even with "bottoming out of economy" 
(2) Go into deeper discussions at party leaders' debate 
 
Sankei: 
(1) Party leaders' debate: Go into specifics of agreement on ship 
inspection 
(2) Amended agricultural land law: Review of acreage reduction 
policy needed as well 
 
Tokyo Shimbun: 
(1) Second party leaders' debate: Difference in momentum evident 
(2) Economic trends: Optimistic projection aimed at election? 
 
Akahata: 
(1) Do not allow passage of unconstitutional bills 
 
3) Prime Minister's Official Residence (Kantei) 
 
Prime Minister's schedule, June 17 
 
NIKKEI (Page 2) (Full) 
June 18, 2009 
 
07:53 Took a walk around his official residence. 
10:01 Attended an Upper House plenary session. 
 
TOKYO 00001368  003 OF 013 
 
 
10:27 Met at the Kantei LDP diplomacy special committee chairman and 
former Prime Minister Yoshiro Mori, the committee's vice chairman 
and former Chief Cabinet Secretary Machimura, and others. Afterward 
met Upper House member Ichiro Tsukada. 
11:31 Met Chief Cabinet Secretary Kawamura. 
15:00 Attended a party-head debate. 
16:42 Met Deputy Chief Cabinet Secretary Uruma at the Kantei. 
18:04 Attended a meeting of ministers connected with the monthly 
economic report. 
19:20 Met Kawamura. 
19:35 Dined at a Hotel New Otani Japanese restaurant with Vice 
Finance Minister Sugimoto, Budget Bureau Director-General Tango, Tax 
Bureau Director-General Kato, and Deputy Vice Minister Katsu. 
21:35 Returned to his official residence. 
 
4) N. Korean missile possibly set to pass over Aomori for Hawaii 
 
YOMIURI (Top play) (Abridged) 
June 18, 2009 
 
North Korea is now preparing to launch another long-range ballistic 
missile from a facility at Dongchang-ri in its northwestern province 
of North Pyongan. The missile is highly likely to head for Hawaii, 
passing over Aomori Prefecture, according to the Defense Ministry's 
analysis. The missile could be launched in early July, sources said. 
Based on this analysis and intelligence from U.S. reconnaissance 
satellites, the Defense Ministry has moved into top gear its study 
on how to deploy Aegis-equipped destroyers equipped with Standard 
Missile 3 (SM-3) interceptor missiles and ground-based Patriot 
Advanced Capability 3 (PAC-3) missiles. 
 
According to the Defense Ministry, it has been confirmed that North 
Korea has missile sites at Kitairei near the military demarcation 
line with South Korea and at Dongchang-ri near the Yellow Sea, in 
addition to a missile site at Musudan-ri in its northeastern region, 
where North Korea launched a long-range ballistic missile in April. 
At the Dongchang-ri facility, either a Taepodong-2 missile or an 
upgraded Taepodong-2 projectile was believed to have been brought 
from a missile manufacturing facility near Pyongyang on May 30. 
 
On the assumption that this missile is a two- or three-stage type 
and has capability equal or superior to the long-range ballistic 
missile North Korea launched in April, the Defense Ministry predicts 
that one of the missiles now being prepared will likely be launched 
toward Hawaii, with the possibility of a launch toward Okinawa and 
Hawaii. If a missile was launched toward Okinawa, when its 
first-stage booster is separated it could fall in waters off China 
and might anger China. In the case of a launch toward Guam, the 
launched missile will overfly South Korea and Japan's Chugoku and 
Shikoku regions, so the booster would have to be dumped onto a land 
area. As such, the Defense Ministry sees both possibilities as 
extremely low. 
 
In the case of a launch toward Hawaii, the booster could be dumped 
into the Sea of Japan. If the test missile is successfully 
long-ranged, it will be a great military threat to the United 
States, which has not regarded North Korean missiles as a threat to 
North America or Hawaii. The Defense Ministry therefore concluded 
that the Hawaii route is most likely. 
 
Hawaii, however, is situated about 7,000 kilometers away from North 
Korea. The upgraded version of the Taepodong 2 only has a range of 
 
TOKYO 00001368  004 OF 013 
 
 
4,000 to 6,500 kilometers. The Defense Ministry believes that this 
latest missile, even if it took the shortest route over Aomori 
Prefecture, would not reach Hawaii. 
 
5) LDP's Special Foreign Policy Committee makes proposals 
 
YOMIURI (Page 4) (Full) 
June 18, 2009 
 
Former Prime Minister Yoshiro Mori, chair of the Liberal Democratic 
Party (LDP) Special Committee to Strengthen Foreign Policy, 
yesterday visited Prime Minister Taro Aso at the Prime Minister's 
Official Residence (Kantei) to hand him a set of proposals, 
including one calling for appointing persons from diverse 
backgrounds to diplomatic posts. The proposals include: 1) upgrading 
and expanding the government official development (ODA) program; 2) 
positioning support for Japanese companies advancing overseas as a 
duty of the diplomatic establishments abroad; and 3) increasing 
opportunities for young Foreign Ministry personnel to work in 
developing countries. Aso promised to look into the 
recommendations. 
 
6) Interview with next consul general for Okinawa: Not prepared to 
discuss relocation of Futenma base outside the prefecture, even if 
promoted by a DPJ administration 
 
RYUKYU SHIMPO (Page 1) (Full) 
June 18, 2009 
 
(Tokyo) 
 
The U.S. Embassy's security policy unit chief, Raymond Greene, who 
is slated to become the next consul general for Okinawa, stated in 
an interview by the Ryukyu Shimpo that even if the Democratic Party 
of Japan (DPJ) were to assume power, and asks the U.S. government to 
relocate Futenma Air Station outside the prefecture, and to 
reconsider the (U.S. force realignment) package that includes the 
Guam Relocation Agreement, "The U.S. side is not prepared to discuss 
relocating Futenma outside the prefecture or revising the Guam 
Agreement." Greene stressed the U.S. intent to proceed with the 
current Japan-U.S. agreements. 
 
Asked about local requests, including by the prefecture, to alter 
the Futenma relocation site into the sea, Greene avoided making a 
clear yes or no statement, saying, "We would like to complete the 
environmental assessment and start construction as soon as 
possible." 
 
As for the reason the U.S. force realignment plan would not be 
reviewed, he stated: "U.S. force realignment lies at the foundation 
of the U.S.-Japan alliance, and if we do not implement the basic 
agreement, under the current severe security environment in East 
Asia, it would send the wrong message." He emphasized that the U.S. 
would proceed according to the agreement. 
 
7) Aso again denies 'secret deal' over Okinawa reversion 
 
TOKYO SHIMBUN (Page 2) (Full) 
June 18, 2009 
 
The Japanese and U.S. governments reportedly exchanged "secret deal" 
notes concerning the reversion of Okinawa (in 1972), and the 
 
TOKYO 00001368  005 OF 013 
 
 
government has been sued for its information disclosure. In 
connection with this, Prime Minister Aso has denied that there was 
such a secret agreement. "All I can say is that there is no secret 
agreement," Aso said yesterday evening, adding, "I have been saying 
so all along." 
 
The government has asserted in a court hearing that it has no such 
document. In oral proceedings, the presiding judge called on the 
government to give a rational explanation about why it does not have 
the document. Asked about this, Aso said: "That's a matter of 
diplomatic documentation, so I'd like you to ask the Foreign 
Ministry. Anyway, this matter is pending in court, so I can't give 
you an answer." 
 
8) Main points from one-on-one debate 
 
SANKEI (Page 5) (Abridged) 
June 18, 2009 
 
The following is the gist of yesterday's one-on-one debate in the 
Diet between Prime Minister Taro Aso and Democratic Party of Japan 
(Minshuto) President Yukio Hatoyama. 
 
North Korea problem 
 
Hatoyama: If it's necessary to enact a new law for cargo 
inspections, we would be willing to discuss this legislation. I 
promise we will try to reach a conclusion as soon as possible. We 
will cooperate on what we should, while scrutinizing the bill's 
content. It's my understanding that the House of Representatives 
will be dissolved shortly for a general election, so let me ask you 
to come up with the bill as soon as possible. 
 
Aso: The new United Nations Security Council resolution is far 
stricter than the one adopted last time. That's a result in its own 
way. We should respond to it sincerely. We will present the bill 
immediately, and I want to see the ruling and opposition parties 
concur and reach a conclusion. 
 
Security affairs 
 
Aso: I think what's most important now is to make the Japan-U.S. 
Security Treaty steadfast. Concerning whether the (U.S. Navy's) 
Seventh Fleet alone can protect the security of Japan, there is 
obviously something biased (in DPJ Deputy President Ichiro Ozawa's 
standpoint). I want the Diet to hold another one-on-one debate for 
us to discuss ways and means (over whether or not to hike the 
consumption tax) and security issues. 
 
Hatoyama: Absolutely. In the end, you suddenly brought up something 
about security matters. The people must be flabbergasted. While 
holding full-blown discussions, I would like to clarify why the 
public is disgusted with the Aso government. 
 
9) Aso on defensive in Diet debate with DPJ chief Hatoyama 
 
ASAHI (Page 2) (Excerpts) 
June 18, 2009 
 
Prime Minister Aso and Democratic Party of Japan President Hatoyama 
faced off in the Diet in their second debate yesterday. Now that his 
administration's management has entered the danger zone as public 
 
TOKYO 00001368  006 OF 013 
 
 
support has sharply plunged, Aso wanted to fight back in the debate. 
But as he was apparently thrown on the defensive, his irritation was 
underscored. In the Liberal Democratic Party, calls for dumping Aso 
are growing. Depending on the outcome of the Tokyo metropolitan 
assembly election on July 12, the political situation might become 
even more intensified. 
 
Hatoyama takes lead 
 
When "remaining one minute" was announced, Aso suddenly took up the 
national security issue. 
 
"We place emphasis on the security issue. There was a suggestion 
that only the deployment of the (U.S.) Seventh Fleet is sufficient. 
I think it is most important to strengthen the Japan-U.S. Security 
Treaty." 
 
Former DPJ President's seventh fleet remark was good material for 
the prime minister to attack the lack of the ability to hold the 
reins of government. But his abrupt change of topics invited 
sniggers even from among ruling party members. Hatoyama snapped: "I 
think the people listening must be amazed." 
 
During the 45-minute debate, Hatoyama took the initiative from the 
beginning to the end. 
 
Upon saying, "I was advised by other lawmakers not to take up this 
topic," Hatoyama brought up the issue of Japan Post Holdings Co. 
President Yoshifumi Nishikawa's reappointment at the outset, saying: 
"You cannot make proper judgments, you cannot make consistent 
judgments, and you make wrong judgments. From the point of view of 
me and the people, you fired a person who should not have been 
fired." 
 
Moves for ousting Aso speeding up in LDP 
 
The prime minister's lack of emotional capacity might be attributed 
to accelerated "Aso-dumping" moves in the LDP. 
 
A senior LDP member who is close to Aso said last night, "Since he 
has busily stumped (to support LDP potential candidates for the 
Tokyo assembly election), if the party loses the election, he might 
have to take responsibility. The prime minister must be ready for 
that," causing a stir in the party. His remark might be premised on 
a victory in the Tokyo assembly election, but some speculate that 
depending on the outcome of the election, the prime minister might 
be pressed to step down. 
 
Aides close to the prime minister are frantically trying to put out 
the fire. Chief Cabinet Secretary Kawamura said in a press 
conference yesterday: "A Tokyo assembly election is to elect 
assembly members. The outcome is not linked to the prime minister's 
responsibility." Another aide also said yesterday: "Even if the 
party loses the Tokyo election, the prime minister will not need to 
resign." 
 
Even so, an increasing number of LDP members have begun to distance 
themselves from Aso in the wake of the issue of reappointment of 
Japan Post President Nishikawa. Many members see the Tokyo election 
as a prelude to the coming general election and the outcome of the 
election as a final judgment on whether the general election should 
be carried out under Prime Minister Aso. 
 
TOKYO 00001368  007 OF 013 
 
 
 
A senior New Komeito member said on June 16, the day before the 
party head talks: "If he is unable to fight back, it might determine 
the outcome of the election." But he was not able to perform 
satisfactory enough to regain political foothold in the debate 
yesterday. 
 
Meanwhile, LDP House of Representatives member Koichiro Shimizu, a 
member of the Koga faction, started an activity yesterday to call 
for a vote of confidence in the prime minister. Machimura faction 
Lower House member Taku Yamamoto has begun collecting signatures to 
call for moving up the general election. 
 
10) LDP in agony due to dismal support ratings for Aso cabinet; No 
effective means in sight 
 
NIKKEI (Page 2) (Abridged slightly) 
June 18, 2009 
 
The Liberal Democratic Party (LDP) is becoming restless due to 
declines in support ratings for the cabinet of Prime Minister Taro 
Aso. There are growing calls for a cabinet shuffle, and some members 
have begun openly discussing "emergency measures," such as an early 
LDP presidential election with the aim of unseating Aso. The 
situation reflects the government and the LDP which lack effective 
means to buoy up the administration ahead of the next House of 
Representatives election. 
 
A rumor is circulating in the LDP that Prime Minister Aso made a 
call to Finance Minister Kaoru Yosano's cell phone to tell him that 
he would carry out a minor cabinet shuffle on July 2. 
 
The government plants to adopt the basic economic and fiscal policy 
guidelines for fiscal 2009 at a cabinet meeting on June 23. Key 
bills and fiscal 2009 extra budget-related bills now under 
deliberations are also expected to clear the Diet by June 26. At 
present, Yosano is concurrently serving as finance, financial 
services, economic and fiscal policy minister and Tsutomu Sato as 
internal affairs minister and national public safety chairman. The 
view is that Aso will carry out a cabinet shuffle to appoint 
individuals who are highly appealing to the public in the name of 
removing Yosano and Sato from dual/triple posts. 
 
But the Prime Minister's Official Residence (Kantei) and Yosano 
totally denied the cabinet shuffle rumor. In any case, such an 
observation reflects the anguish of the LDP which is struggling to 
find a next step to increase the cabinet's support ratings. 
 
Even more serious is the growing frustration in the Aso camp that 
has been supporting the Prime Minister. 
 
Former prime ministers Yoshiro Mori and Shinzo Abe, former Chief 
Cabinet Secretary Nobutaka Machimura, and others hastily assembled 
together in the Diet building on June 16. In the session, one 
indicated that a cabinet shuffle before the Lower House election 
could be an option. Another presented a plan to convene an 
extraordinary Diet session immediately after the current session 
ends on July 28 that would run until September 10 to coincide with 
the expiration of the Lower House members' term in order to carry 
out the next general election in October. 
 
An LDP executive close to Aso complained to his aide, "The Prime 
 
TOKYO 00001368  008 OF 013 
 
 
Minister is slow to make decisions and his views are inconsistent." 
Another executive who called for a cabinet shuffle said: "The Kantei 
lacks a sense of crisis. If we were about to die, I would rather do 
something about it than do nothing." 
 
An LDP executive indicated on June 16 that if the party lost the 
July 12 Tokyo assembly election, the Prime Minister would take steps 
accordingly. The repercussions of this statement are still being 
felt. The executive told the press corps yesterday: "We are working 
hard to win the election. I didn't say (the Prime Minister) would 
resign." Nevertheless, the prevailing view is that the trend of 
unseating Aso is unstoppable. 
 
First-term Lower House member Koichiro Shimizu of the Koga faction 
kicked off a signature-collection drive yesterday for conducting a 
confidence vote on the LDP president after the Tokyo election. The 
drive effectively calls for an early LDP presidential election, 
instead of in September as planned, before the next Lower House 
election. Furthermore, some in the party are calling for the Prime 
Minister's voluntary resignation. 
 
Meanwhile, Aso had been considering visiting Shizuoka to stump for 
the LDP candidate running in the July 5 gubernatorial race. But he 
decided not to do so yesterday, the day before the election's 
official announcement. Many think Aso made the decision in the hope 
that in the event the LDP candidate loses the race, its outcome 
would not affect national politics. 
 
A New Komeito party leader muttered disgustedly: "Nothing can be 
done at this stage. We will just do whatever we need to do." 
 
11) LDP desperate to cap rumor that Aso would take responsibility if 
his party is defeated in Tokyo Metropolitan Assembly election 
 
YOMIURI (Page 4) (Full) 
June 18, 2009 
 
A senior Liberal Democratic Party (LDP) member said that if a 
defeated in the Tokyo Metropolitan Assembly election (July 12) will 
develop into the question of whether Prime Minister Taro Aso should 
resign. This remark is creating quite a stir in the LDP. Although 
LDP Secretary General Hiroyuki Hosoda is desperately trying to put 
out the flames caused by the remark, Hosoda's attempt is instead 
highlighting the LDP's lack of confidence and its impatience. 
 
The turmoil this time was caused by the senior LDP member, who said 
in the evening of June 16: "Since the Prime Minister visited many 
electoral districts, he has probably made up his mind." The senior 
member yesterday explained about his remark that "What I meant is 
that the Prime Minister knows if we suffer a setback in the Tokyo 
Metropolitan Assembly election, the political situation will become 
fluid due to various views." For the reason that the senior member 
is Aso's close aide, there was strong speculation in the LDP that if 
the party is defeated in the Tokyo election, Aso might leave office 
 
Aso and the LDP leadership are desperately trying cap such 
speculation. Aso said in a strong tone last evening to the press 
corps: Local elections and national elections are totally 
different." 
 
Hosoda told reporters yesterday: "(The Prime Minister) puts his 
faith in the next House of Representatives election. He thinks (the 
 
TOKYO 00001368  009 OF 013 
 
 
Lower House election) is of utmost importance." Chief Cabinet 
Secretary Takeo Kawamura also stated in a press conference: "It is 
true that the Prime Minister is putting all his energies into (the 
Tokyo election). However, he does not think that (the result of the 
election) will directly lead to (his course of action)." 
 
In a meeting of yesterday of the ruling camp executive members, LDP 
Diet Affairs Committee Chairman Tadamori Oshima bowed his head, 
saying: "Various views are raised in our party. I'm sorry for 
causing trouble." After the meeting, New Komeito Secretary General 
Kazuo Kitagawa told reporters: "It is inappropriate for the third 
person to talk about what course of action the Prime Minister will 
take." 
 
The reason for Hosoda attempting to put on the rumor is because 
there still remains a drive to remove Aso from office in the LDP 
because of the low public support rates for the Aso cabinet prior to 
the Lower House general election. His effort, however, has caused 
worries and doubts in the party that the LDP will likely suffer from 
a setback in the Tokyo Metropolitan Assembly election, as well. 
 
Young LDP lawmakers are apparently concerned about an impact that 
the Aso cabinet's low approval ratings will have on their 
campaigning for the Lower House election. Lower House member 
Koichiro Shimizu, a Koga faction member, who is now serving his 
first term in the Diet, yesterday distributed to LDP lawmakers 
copies of the document calling for carrying out a confidence vote on 
Aso as LDP president. He explained about his action that "If the LDP 
president is replaced immediately after the Lower House election, 
voters will lose their reason for voting the LDP." A senior LDP 
member lamented such move, saying: "Everybody is doing his own 
thing. The Aso administration is really in its final days." 
 
12) Opposition parties preparing for early Lower House dissolution 
 
YOMIURI (Page 4) (Full) 
June 18, 2009 
 
Predicting that there is a possibility that Prime Minister Taro Aso 
will soon decide to dissolve the House of Representatives, 
opposition parties are speeding up preparations for the general 
election. 
 
The secretaries general of the Democratic Party of Japan (DPJ), 
Social Democratic Party (SDP), and People's New Party (PNP) held a 
meeting yesterday in the Diet building. The three secretaries 
general shared the perception that the Lower House will be dissolved 
on July 2 for a snap election on Aug. 2. Their prediction is that 
Aso will dissolve the Lower House before the Tokyo Metropolitan 
Assembly election, since he might be forced to leave office 
depending on the outcome of the Tokyo election. Azuma Koshiishi, 
chairman of the DPJ caucus in the House of Councillors, said: "If 
(Aso) does not dissolve the Lower House by (July) 2, he will not be 
able to dissolve on his own. So, I have had the information that 
that's possible." 
 
In the meeting, the participants confirmed that the three parties 
will launch discussion on common policy after the DPJ formulates by 
the end of next week the framework of its manifesto (set of campaign 
pledges) for the Lower House election. 
 
13) Nishimatsu political donation scandal: Improper that Nikai 
 
TOKYO 00001368  010 OF 013 
 
 
faction was not indicted; Panel rules investigation was not 
exhaustive 
 
AKAHATA (Page 1) (Excerpt) 
June 18, 2009 
 
The political support group, New Wave (under the Nikai faction), of 
which Minister of Economy, Trade and Industry (METI) Toshihiro Nikai 
is the representative, received 8.38 million yen purchases of party 
tickets from the dummy political organization of the second-tier 
general contractor, Nishimatsu Construction Company. In that 
connection, the special investigative unit of the Tokyo Prosecutors 
Office decided not to indict Upper House lawmaker Shinya, the 
accountant of the support group, and others relevant to the case. 
However, in a decision revealed yesterday, Tokyo's third 
investigative committee (a judicial panel) ruled that not indicting 
those involved was improper. 
 
14) Postal scam: Former welfare ministry chief says he reported 
issuance of falsified certificate to DPJ member 
 
SANKEI (Page 2) (Excerpts) 
June 18, 2009 
 
Osaka District Public Prosecutors Office is investigating a case of 
the Health, Labor and Welfare Ministry's alleged issuance of a fake 
certificate to allow a group involved in direct mail marketing to 
claim a disability discount on postal costs. In questioning, a 
former Handicapped Person's Health and Welfare Division chief, 57, 
said that after Atsuko Muraki, who was a senior ministry official in 
charge of administration pertaining to disabled people and was his 
subordinate at that time, informed him of the issuance of a 
certificate to the group Rin no Kai, "I reported it to a Democratic 
Party of Japan (DPJ) lawmaker," according to informed sources 
yesterday. 
 
Muraki, who was arrested on charges of falsifying paperwork, has 
denied the charges, but prosecutors take the testimony as evidence 
to back up her charges. They have also judged it highly likely that 
the former chief reported the issuance of a certificate to the 
lawmaker over the phone. Prosecutors will conduct an investigation 
to find out whether the former chief recognized that the paperwork 
had been falsified. 
 
In early June 2004, immediately after receiving information from 
Muraki, the former chief made a phone call to the DPJ lawmaker, 
according to the sources. 
 
Kunio Kurasawa, 73, who is a key member of Rin no Kai, asked the DPJ 
lawmaker in his office in February 2004 to act as an intermediary 
between the group and the ministry. The lawmaker phoned the former 
department chief there. It has already been learned that the former 
chief later instructed Muraki to take action in response to 
Kurasawa's request. 
 
In early June, Muraki was asked directly by Kurasawa, who was 
arrested, to quickly issue a certificate. In response, she 
reportedly told Tsutomu Kamimura, who was arrested, to "issue a 
certificate to the group even though it might not be involved in any 
activity to help disabled people." 
 
15) Finance Minister Yosano declares in monthly economic report that 
 
TOKYO 00001368  011 OF 013 
 
 
economy has bottomed out 
 
MAINICHI (Top Play) (Full) 
June 18, 2009 
 
Kaoru Yosano, who is in charge of economic and fiscal policy as well 
as financial services, on June 17 submitted the June monthly 
economic report to a meeting of related cabinet ministers. In 
response to the ongoing movements showing improvements of 
China-bound exports and industrial output, the government removed 
the word "worsening" from the overall assessment of the economy for 
the first time in seven months and revised the report upward for the 
second straight month, by including the wording "Although the 
economy still remains in a harsh situation, an upward trend is seen 
in some sectors." Yosano, during a press conference after the 
meeting, effectively declared that the economy has bottomed out. He 
said, "The economy bottomed out in the January-March quarter. Now 
that exports and industrial production have taken an upward turn, it 
can be strongly estimated that the economy has bottomed out." 
 
The current economic recession kicked in in November 2007. The 
economy significantly slowed due to the financial crisis that 
occurred last fall. The overall assessments of the economy in 
monthly reports since last December had included the wording 
"worsening". The assessment in the May monthly report was revised 
upward for the first time in three years and three months. Since 
economic indexes for exports and industrial output improved, as can 
be seen by the industrial production index recording its highest 
rate of increase in 56 years compared with the preceding month's 
level, the government has decided to further revise upward the 
overall assessment of the economy. 
 
Assessments of five out of 11 individual items in the report - 
exports, imports, industrial production, personal consumption, and 
bankruptcies - were revised upward. The wording for exports was 
changed from "about to stop falling" to "showing moves to pick up," 
and that for industrial production to "picking up." 
 
However, capital investment by companies and employment still 
remains poor. In particular, the employment situation is continuing 
to deteriorate with the job-offers-to-seekers ratio recording the 
lowest-ever level of 0.46 in April and the overall jobless rate 
reaching the 5 PERCENT  level for the first time in five years and 
five months. 
 
Since the future course of overseas economies, such as the U.S. and 
Chinese economies, is unclear, the Cabinet Office remains cautious 
about the future of the economy. It says that since it cannot be 
determined that the economy has entered the sustainable recovery 
phase, there still is a high risk of the economy "hitting a second 
bottom." Therefore, the wording that the economy is still in a grim 
situation is kept intact. It is believed that the declaration that 
the economy has hit the bottom was partly motivated by the Aso 
administration's desire to stress the efficacy of a set of economic 
stimulus packages adopted since the end of last year in the 
run-up-to the upcoming general election and the G-8 Summit to be 
held in July. 
 
16) President Arroyo replies in writing, "I would like to strengthen 
the Japan-Philippines EPA" 
 
TOKYO SHIMBUN (Page 3) (Full) 
 
TOKYO 00001368  012 OF 013 
 
 
June 18, 2009 
 
Michio Yoshieda, Manila 
 
Replying to Tokyo Shimbun's written interview before leaving the 
Philippines, President Arroyo, who came to Japan on June 17, 
stressed, "Japan is the most important partner for the Philippines' 
success." She thus indicated her stance of aiming to strengthen the 
Japan-Philippines Economic Partnership Agreement (EPA), which came 
into effect late last year. 
 
The president praised the EPA, saying, "Nurses and care-givers from 
our country went to Japan in May. They are already beginning to 
achieve results." She expressed expectations that the EPA will be 
used in other areas as well in an effective way." 
 
She also revealed her intention to ask for more investment by Japan 
into the Philippines during the upcoming talks with Prime Minister 
Aso, noting, "More investment is needed in order for our country to 
create new jobs." 
 
She also said that she hopes to see Japan sign EPAs with China, 
South Korea, Australia, etc., in addition to Association of 
Southeast Asian Nations (ASEAN) members with which Japan has already 
signed EPAs, in order to establish economic partnerships involving 
East Asia as a whole. 
 
Concerning North Korea's nuclear development issue, Arroyo clarified 
a stance of supporting Japan's position, noting, "Japan has 
supported the Philippines and ASEAN. The Philippines must coordinate 
with Japan in taking action against North Korea's threat, which is 
imposing fear and anxiety on the East Asia region." 
 
17) China to start construction of pipelines via Burma in September, 
may affect Japan's reliance on Middle East oil 
 
SANKEI (Top play) (Full) 
June 18, 2009 
 
Toshu Noguchi, Beijing 
 
It was learned on June 17 that full-fledged construction work on 
pipelines for oil and natural gas from Burma (Myanmar) to China will 
start in September. With this, China will be able to transport crude 
oil from the Middle East and Africa without passing through the 
unstable Strait of Malacca or South China Sea. It is believed that 
this will serve as one of the arteries to ensure stable supply of 
crude oil for China, the world's number two oil importer, and may 
possibly result in China's greater reliance on Middle Eastern oil. 
This is also likely to have an impact on Japan, which relies on the 
Middle East for most of its oil imports. 
 
China and Burma signed an agreement on the construction of the 
pipelines for oil and natural gas in March. According to the Diyi 
Caijing Ribao (China Business News), officials of Petrochina, a 
major Chinese oil and natural gas company, revealed on June 15 that 
the construction project costing approximately 2 billion dollars 
will go into full swing in September. 
 
The pipelines will start from the port city of Sittwe (Akyab) in 
western Burma, pass through Mandalay in the central part of the 
country, and go into Yunnan Province in China, thereby reaching 
 
TOKYO 00001368  013 OF 013 
 
 
Kunming via Dali. It will have a total length of some 1,100 
kilometers and is expected to transport about 20 million tons of oil 
each year, or 400,000 tons daily. 
 
The pipeline for natural gas will be completed as soon as 2012. It 
will ultimately be extended to Nanning in Guangxi Province and will 
transport 12 billion cubic meters of natural gas each year. 
 
China became the number two oil consumer in the world in 2003 and 
surpassed Japan to become the number two oil importer in May 2008. 
It relies on imports for around 60 percent of domestic consumption. 
In 2007, the top five suppliers were Saudi Arabia, Angola, Iran, 
Russia, and Oman, with the Middle East taking up 45 percent and 
Africa 33 percent. 
 
At present, most crude oil from the Middle East and Africa passes 
the Strait of Malacca enroute to China. Not only is the strait 
crowded and plagued by pirates, there are other factors of 
uncertainty in this area such as Indonesia, which has a history of 
anti-Chinese campaigns. There is also the territorial dispute over 
the Nansha islands in the South China Sea. 
 
The Chinese government was looking for alternatives to relying on 
the Strait of Malacca route to secure its energy supply. This fit in 
nicely with Burma's desire to earn foreign currency, resulting in 
the pipeline project. 
 
Avoiding the Strait of Malacca when transporting oil also represents 
cost cutting for China, where oil consumption is constantly on the 
rise. 
 
If China increases its procurement of oil in the Middle East after 
the pipeline is completed, this may impact crude oil supply for 
Japan, which imported 86.9 percent of its oil from this region in 
¶2008. This may also contribute to a worldwide rise in oil prices. 
 
ZUMWALT