Cablegate: Daily Summary of Japanese Press 02/26/10

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UNCLAS SECTION 01 OF 09 TOKYO 000395

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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 02/26/10

INDEX:

(1) Potential negative impact of testimony by Toyota president on
Japan-U.S. security arrangements (Sankei)

(2) Focus on Iran's response to Japan's proposed solution to nuclear
issue (Nikkei)

(3) Japan proposes uranium enrichment for civilian use for Iran as
solution to Iranian nuclear issue (Nikkei)

(4) Okinawa governor states for first time he may oppose Futenma's
relocation within Okinawa (Yomiuri)

(5) Municipalities' chiefs express opposition to plan for land-based
Futenma relocation facility to Naha Defense Bureau director (Okinawa
Times)

(6) Municipalities' association adopts resolution calling for review
of SOFA (Okinawa Times)

(7) U.S. Marines in Okinawa play important role of deterrence and
crisis response (Asahi)

(8) Keidanren to end its involvement in steering corporate
donations; DPJ welcomes the decision, which will be a blow to LDP
(Asahi)

(9) Postal services likely to be bloated: Fate of massive funds at
Japan Post Bank (Nikkei)

ARTICLES:

(1) Potential negative impact of testimony by Toyota president on
Japan-U.S. security arrangements

SANKEI (Page 8) (Full)
February 25, 2010

Yoshihisa Komori, Washington

There have been times in the past when Japan and the U.S. were at
loggerheads over automobile issues yet were still able to strengthen
their ties. Toyota Motor Corp. president's testimony before a U.S.
congressional committee will become one of the highlights of this
distorted history. But behind this development, there must be some
complicated political motives of the U.S. government in addition to
"the threat to American people's lives." Given this, depending on
how the American people respond to Toyoda's testimony, there could
be a negative impact on other areas of Japan-U.S. relations,
including security.

Victims' family members also testify

The U.S. Congress indicated its intention in a series of hearings to
focus on Toyota's technical probe into the suspected problem of
sudden unintended acceleration with Toyota's cars, which resulted in
accidents. To this end, Congress also summoned family members of car
accident victims as witnesses. In the hearing on Feb. 23 carried out
on the premise that the responsibility for the threat to American
people's lives rests with Toyota, Congress members grilled the
company relentlessly.

TOKYO 00000395 002 OF 009

Moreover, congress members and the media blamed Toyota executives
for their initial responses to claims as "trying to hide unpleasant
realities" or "trying to evade responsibility." Many critics shed
negative light on Japan as a whole in discussions on its culture and
society, and even compared Japan with the U.S. in terms of corporate
culture and legal systems.

It has been 50 years since Toyota began selling its products in the
U.S. and 25 years since the company started production there, as
President Toyoda emphasized in his testimony. Toyota cars became
hugely popular among American customers. The company created nearly
200,000 jobs at its more than 10 plants across the U.S and laid out
an extensive sales network in the nation. Toyota has achieved the
record of selling the largest number of passenger cars in the U.S.
These business results prove that the company has blended right in
with American society.

Toyota becomes a villain in just a few months

This favorable image of Toyota changed completely in a few months.
As the target of attacks in the congressional hearings, the company
is now being treated as a villain. This change in the company's
image is said to be attributed to the unusual circumstances of the
accidents and the company's initial slow responses to the problems.
The U.S. Congress members' demand for summoning President Toyoda as
a witness was probably due to Toyota's strong presence in the U.S.
community, as well as a reflection of their desire to listen to an
explanation directly from the top leader of the company that has
become such an integral part of U.S. society.

Behind the rapidly growing and spreading criticism of Toyota,
however, there certainly is another element. Rush Limbaugh, a
political radio commentator who is critical of the Obama
administration, has made the following comment almost every day:
"The Obama administration encouraged the Toyota bashing to support
state-run General Motors and also to cover up for its feeble
policymaking."

Democrats in Midwestern and Northern states, where U.S. automakers'
production bases are concentrated, have taken the lead in lashing
out at Toyota, given their close connections with auto labor unions.
Meanwhile, Republicans in Southern states, where Toyota's plants are
located, have stood up for the company. The conflict of views in
Congress is regarded as a political showdown.

As it stands, there are certainly differing views among Congress
members, but the tension on auto issues between Japan and the U.S.
runs deep, as symbolized by Toyoda's testimony before Congress. In
the past, as well, there have been cases in which issues related to
Japanese vehicles have had major effects not only on the U.S.
economy but even on the political and security fronts. Now that the
Japan-U.S. alliance has begun to fall apart, it is hard to feel
optimistic about future developments in the Toyota issue.

(2) Focus on Iran's response to Japan's proposed solution to nuclear
issue

NIKKEI (Page 2) (Full)
Evening, February 24, 2010

With the Japanese government sounding out Iran on its proposal for

TOKYO 00000395 003 OF 009

resolving Iran's nuclear issue, the focus is now on Iran's response.
The U.S. and the European countries are stepping up calls for
additional sanctions, and it remains unclear to what extent Japan's
proposal can help resolve the problem. However, the Iranians have
indicated their willingness to continue negotiations, so the
possibility remains that Japan's proposal may yet become the focus
of attention.

Japan presented its proposal shortly after Iran's rejection of one
from the U.S. and Europe. Japan reckoned that since it maintains
relatively good relations with Iran through crude oil imports etc.,
it might be able to get Iran to compromise to an extent. It is
believed that for the same reason the U.S. consented to Japan's
making the proposal.

The reason Iran rejected the U.S. and Europe's proposal to enrich
uranium in France or Russia is that it does not trust the U.S. or
Europe or Russia. Russia has repeatedly delayed the supply of fuel
to the nuclear power plant under construction in Iran in an attempt
to wield influence. It is widely believed that the U.S. and Europe
are "apprehensive of Iran's reliance on Russia," according to a
European diplomatic source.

Part of the reason Iran is maintaining a tough stance toward the
U.S. and Europe lies in the political strife between forces
supporting President Mahmoud Ahmadinejad and Speaker of the
Parliament Ali Larijani. Each time one side attempted to look for a
compromise with the U.S. and Europe, the other side would thwart
their efforts.

(3) Japan proposes uranium enrichment for civilian use for Iran as
solution to Iranian nuclear issue

NIKKEI (Page 1) (Full)
Evening, February 24, 2010

It was learned on Feb. 24 that the government made a proposal to
enrich and process uranium to be used as fuel for nuclear power
plants in Japan for supply to Iran as a solution to the nuclear
issue. At this stage the Iranian side has not given a clear answer
to this proposal, but Speaker of the Parliament Ali Larijani, who is
on a visit to Japan, is holding a meeting with Foreign Minister
Katsuya Okada in the afternoon of Feb. 24, and the nuclear issue is
expected to be discussed.

Iran is in dispute with the U.S. and Europe over the nuclear issue
because it has been engaged in the enrichment of uranium, which
could be converted for use in developing nuclear weapons. Tension
has heightened, with Western countries seeking a new sanction
resolution at the UN Security Council. Japan's proposal may become
the focus of great interest depending on Iran's reaction.

Japan sounded out this proposal with Saeed Jalili, director general
of Iran's Supreme National Security Council and its top nuclear
negotiator, when he was in Japan last December. Last October, the
U.S. and Europe made a proposal for Russia and France to enrich and
process uranium for fuel use, but Iran rejected the proposal from
concerns about a plan initiated by the U.S., Russia, and Europe.

In light of this, the Japanese government obtained the U.S.
government's consent to make to Iran a new proposal for the supply
of fuel for nuclear power plants. Japan maintains diplomatic

TOKYO 00000395 004 OF 009

relations with Iran. It is aiming to use its connection with Iran to
play a bigger role in non-proliferation at the nuclear security
summit to be held in Washington in April.

Japan, as the world's only atomic-bombed country, has made nuclear
disarmament diplomacy a top policy. However, it is uncertain whether
Iran will respond positively to the proposal. A senior Japanese
government official reckons that Iran's response "will also depend
on the domestic political situation in Iran, where there is growing
strife between the conservatives and the reformists."

Iran's nuclear issue came up in September last year after it was
found that Iran has a new uranium enrichment facility that was not
declared to the International Atomic Energy Agency (IAEA). The U.S.
and Europe demanded that Iran stop uranium enrichment activities,
transport the slightly enriched uranium in its possession out of the
country, and receive uranium supply from other countries. Rejecting
this proposal, Iran upgraded its level of uranium enrichment this
month, giving rise to increasing concerns in the international
community.

(4) Okinawa governor states for first time he may oppose Futenma's
relocation within Okinawa

YOMIURI (Page 5) (Full)
Evening, February 26, 2010

In connection with reports that the government regards relocation to
an inland area of Camp Schwab (in Nago City, Okinawa) as a promising
plan for the relocation of the U.S. forces' Futenma Air Station in
Okinawa, Governor Hirokazu Nakaima stated at the Prefectural
Assembly on Feb. 26: "There might be a situation in which I will
have to reject (relocation) within the prefecture." This is the
first time that he has mentioned the possibility of opposing such a
plan.

The governor has so far accepted Futenma's relocation to the coastal
area of Camp Schwab based on the 2006 Japan-U.S. agreement. However,
the prefectural legislature passed a unanimous statement demanding
Futenma's relocation out of Okinawa or out of Japan for the first
time on Feb. 24, pressing the governor to change his position.

At the Prefectural Assembly on Feb. 26, Nakaima expressed his
displeasure with the lack of any explanation from the government and
the ruling parties on the Camp Schwab inland proposal. He said: "I
don't know what they are up to. It's all a mystery to me." He added:
"In light of the procedure taken at the assembly (the adoption of
the statement), there might be a situation in which I will have to
reject (relocation) within the prefecture. Needless to say, I am
thinking about it."

(5) Municipalities' chiefs express opposition to plan for land-based
Futenma relocation facility to Naha Defense Bureau director

OKINAWA TIMES (Page 1) (Full)
February 26, 2010

Chiefs of affected municipalities, including Henoko Ward Head
Yasumasa Oshiro, called on Naha Defense Bureau director Ro Manabe in
the bureau office yesterday and handed to him a letter opposing a
plan to build a land-based alternative facility to the U.S. Marine
Corps' Futenma Air Station. The new plan is being floated within the

TOKYO 00000395 005 OF 009

government.

Oshiro told Manabe: "Under the new plan, the danger and noise caused
by Futenma (air operations) would be shifted to the Kushi region. If
that is the case, since local residents' livelihoods will inevitably
be destroyed, we absolutely cannot accept the plan." Manabe replied:
"I would like to make a report to the Defense Ministry so that (the
examination committee on Okinawa base issues) will discuss the issue
while bearing in mind the purport and contents of your request."

In the process of discussing the realignment of U.S. forces in
Japan, too, the Henoko district was cited. Touching on this fact,
Oshiro emphasized: "We confirmed the need to prevent the plan from
being adopted even if we must enter the base. We would like you to
work on the government to drop the plan to build a land-based base
without fail." The mayor added: "We would like you to fully
understand that all residents in the three districts of the Kushi
region are determined to take preventive action." They did not refer
to the existing plan, with Oshima saying: "That is what the
government should decide." Besides Oshiro, Manabe also met with
Toyohara Ward Head Masaaki Shiroma, Kushi Ward Head Kiyotaka Higa,
the administrative committee chairmen of the two wards, and Futenma
alternative facility countermeasures special committee chairman
Hiroshi Kohagura.

After the meeting, Oshiro told reporters: "The candidate who
promised in the campaign not to allow the construction of a new U.S.
base in the Henoko district was elected in the recent (Nago mayoral)
election. We must cooperate in a way we can." He said: "Although the
proposed plan for a land-based facility does not specify whether the
relocated site is Camp Schwab (the district of barracks) or the
maneuvering area (the district of exercise), we cannot accept either
of the two options."

(6) Municipalities' association adopts resolution calling for review
of SOFA

OKINAWA TIMES (Page 2) (Full)
February 26, 2010

The association of municipal governments (chaired by Kadena Mayor
Tokujitsu Miyagi) held its regular general meeting in Naha City
yesterday and unanimously adopted a resolution calling for the
review of the Japan-U.S. Status of Forces Agreement (SOFA). Miyagi
has headed the association since 1998. With the expiration of his
term of office, the association picked Minami-Haibaru Town Mayor
Toshiyasu Shiroma as chairman.

The resolution notes that incidents and accidents involving U.S.
military personnel have continued to occur despite repeated protests
against the U.S. military whenever such incidents and accidents take
place. It then points out: "The Okinawan people's lives, assets and
human rights have continued to be trampled on." The resolution
emphasizes the need to review the SOFA, saying that 50 years have
passed since the two countries signed the accord and that this
problem will never be resolved only by improving the operation of
the SOFA. The letter is addressed to the prime minister, the foreign
minister, the minister for Okinawa, and others.

Chairman Miyagi reiterated the need for nationwide discussions on
national security and the SOFA, remarking: "We naturally place
expectations on Prime Minister Hatoyama's statement that the burden

TOKYO 00000395 006 OF 009

on the Okinawan people will be lightened. We hope the prime minister
will live up to our expectations."

As vice chairmen, the association reappointed Kin Town Mayor
Tsuyoshi Gibu and Tarama Village Mayor Masaaki Shimoji and newly
appointed Kitanakagusuku Village Mayor Kunio Arakaki. Their terms of
office are two years starting on April 1.

(7) U.S. Marines in Okinawa play important role of deterrence and
crisis response

ASAHI (Page 15) (Full)
February 25, 2010

Paul Giarra, former U.S. Defense Department senior country director
for Japan

The Japanese government is now looking into the future options for
the U.S. Marine Corps' Futenma Air Station. The presence of the
Marine Corps has become increasingly important for Japan.

The Marines are the most highly competent combat troops in the
world. The presence of the Marines in Japan has been a deterrent to
"enemies," including North Korea, causing them to hesitate to attack
(U.S. allies). At present the situation in Asia is extremely
delicate. Since Japan has enjoyed security provided by the Marines,
it has been able to devote itself to other challenges.

However, the basic question of why the Marines are important for
Japan's future is sometimes forgotten in the midst of debates on the
realignment of U.S. bases in Okinawa. It is ironic and regrettable
that there are Japanese politicians who argue that since the Marines
have nothing to do with Japan's security, there would be no problem
if the number of Marines were reduced.

There are currently about 18,300 Marines and sailors stationed in
Okinawa. Along with infantry troops stationed in Camp Fuji and an
air unit at the Iwakuni Air Station, the Marines in Okinawa
constitute the core of the III Marine Expeditionary Force (3rd MEF),
which is headquartered in Okinawa. The 18,300 troops include
infantry, air, artillery, intelligence, and supply units, as well as
headquarters. One of the special characteristics of the Marines is
that a Marine Air-Ground Task Force (MAGTAF) (sic) encompasses all
these types of troops.

Marines' air units, especially helicopter units, conduct operations
together with infantry, artillery, and supply units in
contingencies. So they are required to jointly carry out training
exercises under normal circumstances. As a result, the Marines must
have a heliport facility in Okinawa.

The geographical location of Okinawa is also significant. A base
located near regions where there is a possibility of contingencies
occurring can quickly and effectively deploy troops. Okinawa is
situated in an ideal location. It takes about 36 hours from Okinawa
to the mainland of Japan or South Korea by sea, three days to the
South China Sea, and five days to the Strait of Malacca. It takes at
least three weeks from the West Coast of the United States.

The Marines are not only a deterrent force but also an emergency
response unit that has powerful mobility.

TOKYO 00000395 007 OF 009

However, it is possible to split up the Marine Corps to a certain
extent. Because the 3rd MEF has one of its two brigades stationed in
Hawaii, its scale is smaller than those of the 1st and 2nd MEFs
(stationed in the U.S. mainland).

Under the realignment plan for U.S. forces in Japan, including the
relocation of the Futenma airfield, about 40 PERCENT of the Marines
in Okinawa are scheduled to be transferred to Guam. These troops are
mainly headquarters and supply unit members. The brigade comprising
about an air-ground unit of 10,000 members, including the heliport
unit troops at Futenma, will remain in Okinawa. If the relocation
plan agreed upon between Tokyo and Washington is implemented, the
3rd MEF will be split up and stationed in Hawaii, Guam, and Japan in
a well-balanced manner.

Some have contended that the Marines in Okinawa do not have a means
of transportation. However, the need for transportation can be met
by pre-positioning certain equipment and combining transport
aircraft, amphibious assault ships, and high-speed transport
vessels.

Okinawa's Marines are "Japan's Marines." U.S. Marine Corps Forces
Pacific Commanding General Keith Stalder said, "U.S. service members
stationed in Japan are ready to give their lives to protect Japan."
This is the origin of deterrence.

(8) Keidanren to end its involvement in steering corporate
donations; DPJ welcomes the decision, which will be a blow to LDP

ASAHI (Page 4) (Excerpts)
February 26, 2010

Kyohei Matsuda, Akira Minami

The announcement by Nippon Keidanren (Japan Business Federation) of
its policy to end its involvement in corporate and organizational
donations is creating a stir. The Democratic Party of Japan (DPJ),
which is eager to ban corporate/organizational donations, welcomes
the business lobby's decision in principle. At the same time, the
decision is certain to reduce funds for the Liberal Democratic Party
(LDP), which has been enjoying ample financial support from the
business community. The LDP is likely to be driven into a tight spot
financially as an opposition party.

During a press conference yesterday, DPJ House of Councillors Caucus
Chairman Azuma Koshiishi described Keidanren's decision as the
result of the change of administration. Another veteran lawmaker
noted: "Keidanren's announcement to end corporate donations at this
particular time is a de facto declaration of its intent to keep its
distance from the LDP."

In 2008 Keidanren-affiliated corporations/organizations donated
2.699 billion yen to the LDP in stark contrast to 190 million yen to
the DPJ. The DPJ, which won a landslide victory in last year's House
of Representatives election, is expected to receive 3.6 billion yen
in party subsidies. "The massive sum of party subsidies will be
enough to cover a drop in corporate/organizational donations," a
mid-ranking lawmaker said.

Prime Minister Yukio Hatoyama also mentioned the total abolition of
corporate/organizational donations during a party-head debate last
week. The DPJ is preparing a bill amending the Political Funds

TOKYO 00000395 008 OF 009

Control Law.

In the first place, there are several complicated reasons behind the
DPJ's plan to ban corporate donations. When illegal donations
involving Ozawa came to light last March, the party dodged criticism
by calling for a ban on donations. Last June the party presented to
the Lower House a bill to amend the Political Funds Control Law,
which was partly intended to cut off the LDP's funds at source by
taking advantage of criticism over "politics and money."

Some attribute the DPJ's move to the feud between Ozawa and
Keidanren. During his tenure as LDP secretary general, Ozawa asked
individual companies for 15 billion yen in donations behind
Keidanren's back. This drew a backlash from the business community.
Even after Ozawa joined the DPJ, there have been hardly any
exchanges between the top leaders of the two organizations.

Keidanren's new policy direction is likely to deal a serious blow to
the LDP.

Many corporations, including trading companies and the Japan
Department Stores Association, are making moves to reduce their
donations to the LDP. "The move to quit making donations will
probably gain momentum following Keidanren's decision," a
mid-ranking LDP lawmaker predicted. "We might get knocked out
completely, which is even worse than receiving a body blow."

(9) Postal services likely to be bloated: Fate of massive funds at
Japan Post Bank

NIKKEI (Page 5) (Abridged slightly)
February 24, 2010

In late January a Japan Post Bank executive visited a number of
ruling party members and explained to them (Japan Post Bank's
situation) with a sense of crisis: "If Japan Post Bank's deposit
balance falls below 150 trillion yen, the bank could slip into the
red." In principle, Japan Post Bank is not authorized to engage in
financing business, with the exception of taking part in joint
financing. It reaps profits by investing money deposited by
individuals in government bonds. The size of its deposit balance is
directly connected with profits. Japan Post Bank estimates that if
investment yields and costs remain unchanged, and the deposit
balance falls below 150 trillion yen, the bank would earn no
profits. Japan Post Bank's deposit balance has been on a downtrend
since 2000, marking 177 trillion yen as of the end of 2009.
Furthermore, fixed-amount postal savings worth roughly 20 trillion
yen will reach maturity dates in two years' time, starting in fiscal
2010.

Arguments calling for abolishing cap on postal savings

Unlike sluggish postal services, Japan Post Bank is the most
profitable member of the Japan Post group. It is expected to account
for 60 percent of the consolidated net profits of 430 billion yen
estimated by the group. If the bank's deposit balance actually falls
below 150 trillion yen, it would be difficult to subsidize the cost
of maintaining nationwide uniform services such as financial
services under the plan of the government and the ruling parties.
Management and labor of the Japan Post group and the national
special postmasters association (Zentoku) usually keep far apart.
However, they are united in calling for boosting the deposit

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balance.

State Minister for Financial Affairs and Postal Reform Shizuka Kamei
is envisioning the deposit balance expanding once again as a result
of raising the cap on postal savings. The draft postal reform plan
prepared by the government earlier in the month hints at a possible
rise in the upper limit on postal savings in the future, noting that
necessary measures are to be taken. Some in the government and the
ruling parties are even calling for abolishing the cap.

Japan Post Bank has a huge amount of funds - roughly 1.4 times the
amount held by the Mitsubishi UFJ Financial Group. Does Japan Post
intend to further boost the amount? Pursuing an even larger amount
of funds will not guarantee increased income.

Profit performance is not high

If long-term interest rates rise 2 percent, Japan Post will incur
appraisal security losses of more than 1 trillion yen in postal
savings and postal insurance. Japan Post is concerned about the
present situation, in which 70-80 percent of its funds have been
invested in government bonds. However, new investment ideas, such as
launching into housing loans and loans to small and medium-sized
businesses, as proposed in the government's draft plan, are fraught
with the danger of becoming irrecoverable.

Provided that post offices rooted in local regions advance into the
lending business, their competitors will likely be credit unions or
credit cooperatives, whose main customers are SMEs and individual
owner-managers rather than mega-banks. Competition among small- and
medium-size financial institutions to capture them as customers is
fierce. The standard thinking in the financial sector is that in the
current economic climate, it is difficult to boost interest rates as
a hedge against bankruptcy risks. Profit performance would not be
high either.

There is concern that if post offices launch into the lending
business without personnel possessing know-how or experience they
could suffer a huge amount of bad loans. The government has also
devised a policy of simplifying financial inspection and oversight
of post offices. It appears that it gave consideration to the view
that it is burdensome for small post offices to operate like a bank
branch, as the postmaster of a post office in Tokyo noted. However,
anxieties remain from the perspective of protecting consumers.
(Second of two parts)

ROOS

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