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Viewing cable 09TOKYO1441, JAPANESE MORNING PRESS HIGHLIGHTS 06/26/09 Index: Index:

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Reference ID Created Released Classification Origin
09TOKYO1441 2009-06-26 00:12 2011-02-03 21:09 UNCLASSIFIED Embassy Tokyo
DE RUEHKO #1441/01 1770037
P 260037Z JUN 09


1) Prime Minister's daily schedule (Nikkei) Visit of Under Secretary of Defense Flournoy:
2) Under Secretary Flournoy in press conference notes China's concerns about North Korea's political stance (Nikkei)
3) In meeting with vice defense minister, Under Secretary Flournoy affirms that relocations under USFJ realignment will be according to plan (Asahi)
4) Flournoy acknowledges some adjustments possible to USFJ realignment plan (Yomiuri)
5) Meeting Defense Minister Hamada, Flournoy confirms need for close links among U.S., Japan, South Korea on the North Korea problem (Tokyo Shimbun)
6) Democratic Party of Japan's Okada tells Under Secretary Flournoy he is against relocating Futenma base within Okinawa (Mainichi)
7) Flournoy, Okada discuss USJF realignment agreement (Tokyo Shimbun)
8) Okada makes pitch to Flournay on SOFA review and changing Futenma relocation (Yomiuri) Defense and security issues:
9) U.S., Japan agree on sharing marine interests (Yomiuri)
10) Text of proposed U.S.-Japan sea-power alliance (Yomiuri)
11) Defense Minister Hamada finds Under Secretary Flournay cautious about F-22s to Japan (Mainichi)
12) White House threatens to veto Congressional moves to resume production of F-22s (Mainichi)
13) LDP, New Komeito project team finish work on legislation that would allow cargo inspections of North Korean vessels (Mainichi)
14) Special law on ship searches would carry penalties for those vessels refusing cargo inspections (Yomiuri)
15) Japan shippers have been paying off pirates off Somalia (Asahi)
16) - 125 piracy incidents in waters off Somalia since March (Asahi)
17) Foreign Minister Nakasone at the G-8 foreign ministerial meeting announces initiative of sending team of observers to the Afghan presidential election (Asahi)
18) Three Japanese companies to acquire oil rights in Iraq (Yomiuri) Political agenda:
19) Prime Minister Aso in news conference indicates that Diet dissolution is not far off (Mainichi)
20) Prime Minister using strategy to check the "dump Aso" movement in the LDP (Nikkei)
21) New rumor afloat that dump Aso elements will push for a July 20 early LDP presidential election (Sankei)
13 Articles: 1) Prime Minister's Official Residence (Kantei) Prime Minister's schedule, June 25 TOKYO 00001441 002 OF 013 NIKKEI (Page 2) (Full) June 26, 2009 10:00 Met Deputy Chief Cabinet Secretary Matsumoto, followed by ex-LDP Secretary General Takebe at Kantei; MOFA Asian, Oceanian Affairs Bureau chief Saiki present 11:15 Met LDP General Council Chief Sasagawa, followed by Deputy Chief Cabinet Secretary Uruma, followed by cabinet intelligence director Mitani 12:00 Met Chief Cabinet Secretary Kawamura 13:02 House of Representatives plenary session 14:39 Met incoming and outgoing National Police Agency chiefs Ando, Yoshimura, followed by Finance Minister Yosano 15:26 Met Election Strategy Council Vice Chairman Suga 16:22 Met special adviser to LDP president Shimamura 16:54 Met National Press Club chairman Shiro Saito at Japan Press Center in Uchisaiwaicho, held news conference organized by National Press Club 18:15 Olympic Movement Meeting at Grand Prince Hotel Akasaka 19:24 Campaign office of candidate running in Tokyo Metropolitan Assembly election in Higashi (Shibuya Ward) 19:54 Campaign kickoff ceremony for candidates in Tokyo election at Meguro Gajoen 20:37 Met secretary at "Tokarin" Chinese restaurant in Hotel New Okura 22:35 Arrived at official residential quarters

2) U.S. under secretary of defense says China concerned about North Korean situation at press conference NIKKEI (Page 6) (Full) June 26, 2009 U.S. Under Secretary of Defense Michele Flournoy, who is visiting Japan, held a press conference at the U.S. Embassy in Tokyo on June 25. She said that China is concerned that the political situation in North Korea, which has conducted nuclear and missile tests recently, will be "unstable in the short-term." She also explained that "the U.S. told China that it will implement all the provisions in the sanction resolution (passed by the UN Security Council against the DPRK)" at the U.S.-China vice ministerial defense talks in Beijing, adding that the U.S. is watching what China will do next. Flournoy pointed out that one reason why North Korea is taking a tough stance is that it wants to maintain unity as the process of succession of power from General Secretary Kim Jong Il to his third son Jong Un takes place. She also said that the United States "will make North Korea understand that provocative actions will not benefit its national security" by employing diplomatic "carrots and sticks." On the question of selecting Japan's next mainstay fighter (codenamed FX), Flournoy said: "We asked (the Japanese side) to decide (on the type of aircraft) from the broad perspective of air power," reiterating that the U.S. will continue to urge Japan, which is insisting on the most advanced stealth fighter F-22, to change its mind."

3) U.S. undersecretary of defense in meeting with vice defense minister reveals intention to promote U.S. force realignment as planned TOKYO 00001441 003 OF 013 ASAHI (Page 4) (Full) June 26, 2008 Visiting U.S. Undersecretary of Defense Michele Flournoy met Administrative Vice Defense Minister Kohei Masuda and other officials at the Defense Ministry yesterday. Regarding the planned realignment of U.S. forces in Japan, a review of which some persons in the U.S. are calling for, Flournoy said: "There is no change in the U.S. government's policy of pushing ahead with the realignment in accordance with the roadmap agreed on between Japan and the U.S." She indicated that the U.S. will promote such agreed plans as relocating the U.S. Marine Corps' Futenma Air Station to another site in Okinawa and transferring U.S. Marines in Okinawa to Guam. Flournoy also met Democratic Party of Japan (DPJ) Secretary General Katsuya Okada yesterday. According to DPJ members, she referred to the party's policy of moving the Futenma Air Station to somewhere outside Okinawa and emphasized: "(In such a case) we will lose our all realignment plans and our alliance will be seriously damaged." Okada replied: "The concentration of U.S. military bases in Okinawa is a result of the U.S.' postwar occupation policy. The Status of Forces Agreement is also unfair." Flournoy responded to a press conference with the Japanese press at the U.S. Embassy. Asked about the possibility of revising the Futenma relocation plan, she indicated that even if the U.S. agreed to review it, only minor corrections would be made, saying: "It is possible to adjust the plan, but only minor revisions will be made, such as laying electric lines underground." The U.S. Embassy issued an additional explanation after the press conference, in which it confirmed this position: "If (Japan) calls for major revisions, such as relocating the runways or changing (the design of) the facility, the U.S. will not support it."

4) Pentagon official: Coordination possible over USFJ realignment YOMIURI (Page 2) (Full) June 26, 2009 Visiting U.S. Under Secretary of Defense Michhle Flournoy, meeting the press yesterday at the U.S. Embassy in Tokyo, touched on the planned realignment of U.S. forces in Japan, including the plan to relocate the U.S. Marine Corps' Futenma Air Station. "We can't make major changes but adjustments are possible," Flournoy said. This is the first time that a high-level U.S. official has referred to the possibility of reviewing the realignment plan. In Japan, the leading opposition Democratic Party of Japan (Minshuto) has been calling for the realignment plan to be modified. In addition, there have also been calls from within the U.S. Congress and the U.S. military for alterations. The U.S. Embassy released a document yesterday evening, explaining that what Flournoy said in the press conference meant dealing with security and other issues without changing the agreement in itself.

5) Defense minister in meeting with U.S. under secretary of defense confirms close linkage of Japan, U.S., South Korea in responding to North Korea TOKYO SHIMBUN (Page 2) (Full) June 26, 2009 TOKYO 00001441 004 OF 013 Defense Minister Yasukazu Hamada met on June 25 at the ministry with U.S. Under Secretary of Defense for Policy Flournoy. The two confirmed a policy course of Japan, United States, and South Korea working closely together to enforce the resolution against North Korea by the United Nations Security Council. In the meeting, Under Secretary Flournoy said: "In U.S.-China talks at the vice defense minister level the other day, the Chinese side transmitted that they expect to implement the implement the resolution. But it is also essential for Japan, the U.S., and the Republic of Korea to act as a body." Hamada agreed. Before that, at a meeting between Vice Defense Minister Masuda and Under Secretary Flournoy, the two confirmed the policy direction of following the roadmap as agreed between Japan and the U.S. for the relocation of Futenma Air Station and U.S. Marines stationed in Okinawa to Guam.

6) DPJ secretary general tells U.S. under secretary of defense opposition to Futenma relocation, ending discussion in disagreement MAINICHI (Page 5) (Full) June 26, 2009 Takenori Noguchi Democratic Party of Japan (DPJ) Secretary General Katsuya Okada met U.S. Under Secretary of Defense Michele Flournoy at the party headquarters on June 25. Flournoy stressed the importance of implementing the Japan-U.S. agreement on U.S. Forces Japan realignment, including the relocation of the U.S. military's Futenma Air Station in Ginowan City, Okinawa to Nago City. Okada refuted her with: "The reason why U.S. Forces are concentrated in Okinawa is because it was occupied (by the U.S. Forces) in World War II." The discussion ended in disagreement. Flournoy also touched on the agreement on relocating U.S. Marines in Okinawa to Guam, which has been approved by the Diet in May, saying: "It is important to make progress in the realignment plans." However, the DPJ is against the agreement because it is opposed to the relocation of Futenma within Okinawa. Okada pointed out that, "Japan-U.S. relations over the U.S. military bases are still haunted by the history (of Japan's defeat in the war) 64 years ago." The DPJ has compiled proposed revisions to the Japan-U.S. Status of Forces Agreement (SOFA) with the Social Democratic Party (SDP) and People's New Party (PNP). Okada said that the SOFA is "unfair" and that "it needs to be improved for the sake of long-term stability of the Japan-U.S. relationship," indicating that if the DPJ takes over the administration, it will push for negotiations in stages.

7) DPJ secretary general and U.S. under secretary for defense exchange on U.S. force realignment and other issues TOKYO SHIMBUN (Page 2) (Full) June 26, 2009 Democratic Party of Japan (DPJ) Secretary General Katsuya Okada met at party headquarters yesterday with visiting Under Secretary for Defense Flournoy. Okada stressed that should there be a change in government his party would move forward with a reduction of the U.S. bases on Okinawa and a revision of the Status of Forces Agreement TOKYO 00001441 005 OF 013 (SOFA). He said: "The concentration of U.S. bases on Okinawa stems from the Occupation. The SOFA also is unfair. We must correct the situation in order to have long-term stability in the Japan-U.S. relationship." Flournay indicated as sense of alarm to the DPJ's opposition to the agreement to relocate U.S. Marines on Okinawa to Guam. She said: "We must fully implement the U.S. force realignment. The agreement between the U.S. and Japan to promote U.S. force realignment including the Guam Agreement is now up for Congressional approval." On the relocation of Futenma Air Station, she said: "If this is abandoned, we would lose the ability to resolve the Okinawa problem. I would greatly damage the U.S.-Japan alliance." She sought to constrain the DPJ which is calling for a revision of the plan. Okada retorted: "Now is not the place to negotiate. I should now be debated from a broad perspective."

8) DPJ's Okada makes no mention of Futenma relocation YOMIURI (Page 4) (Full) June 26, 2009 Democratic Party of Japan (DPJ) Secretary General Katsuya Okada met yesterday with U.S. Under Secretary of Defense Michele Flournoy at the DPJ's headquarters. At the meeting, Okada indicated that the DPJ will work on such issues as revising the Japan-U.S. Status of Forces Agreement (SOFA) if it takes over the reins of government in the next House of Representatives election, saying: "The present relations between Japan and the United States are plagued by the past. The SOFA, too, is unfair." Based on the fact that the DPJ has opposed the relocation of the U.S. Marine Corps' Air Station Futenma (Ginowan City in Okinawa Prefecture) within the prefecture, which is a key element of the realignment of U.S. Forces Japan, Flournoy pointed out: "If (the relocation plan) is abandoned, the Japan-U.S. alliance will be seriously damaged." Okada, however, stopped short of commenting, saying: "This is not an occasion to negotiate."

9) Japan-U.S. cooperation proposed to share maritime interests YOMIURI (Page 2) (Full) June 26, 2009 The Ocean Policy Research Foundation yesterday released a set of policy proposals based on discussions at the Japan-U.S. Sea Power Dialogue, a symposium that was held in three sessions from last year through this year to explore bilateral cooperation between Japan and the United States over ocean issues and that was cosponsored by the Sasakawa Peace Foundation USA and the Pacific Forum CSIS and supported by the Yomiuri Shimbun. OPRF Chairman Masahiro Akiyama yesterday handed a report of policy proposals to Defense Minister Hamada. In addition, he has also presented it to Japanese and U.S. government officials concerned, calling for it to be reflected in future policy measures. The report of policy proposals, titled "Japan-U.S. Sea Power Alliance for Safety and Prosperity on the Oceans," came up with policy measures to be addressed, maintaining that the Japan-U.S. alliance plays an important role in making the sustainable use of oceans possible and in creating international orderliness to share its benefits. To do so, the report says Japan should ease its self-imposed arms embargo policy and reinterpret its constitutional TOKYO 00001441 006 OF 013 provisions to allow Japan to exercise the right to collective self-defense. It also advocated establishing a moderate league of maritime powers involving Japan, South Korea, and Australia. In addition, it proposed urging India to cooperate and calling on Russia and China to join in.

10) Main points from 'Japan-U.S. Sea Power Dialogue' policy proposals YOMIURI (Page 4) (Full) June 26, 2009 Defense and security
-- Build up a global maritime partnership (GMP) in the Indian Ocean and the Pacific Ocean.
-- Extend the scope of assistance for the safety of sea traffic through the Straits of Malacca, etc., to the Indian Ocean.
-- Establish a multilateral mechanism for the security of sea lanes on the occasion of antipiracy actions in waters off the east African coast of Somalia.
-- Assist developing countries with coastal development and sea traffic safety assurance, and ease Japan's self-imposed three principles on arms exports.
-- Establish a multilateral mechanism for joint efforts to deal with disputes over natural resources as well as energy resources.
-- Ready intelligence, surveillance, and reconnaissance against hegemony-pursuing powers.
-- Settle the issue of realigning U.S. forces in Japan at an early stage.
-- Integrate the security of oceans, outer space, and cyberspace.
-- Study the possibility of the security environment worsening due to climate change.
-- Allow Japan to participate in collective self-defense.
-- Establish a moderate league of sea powers with South Korea and Australia.
-- Pursue India's cooperation.
-- Call on Russia and China to participate. Sustainable development
-- Carry out "Blue New Deal" to create jobs in eco-friendly development and exploitation.
-- Establish entities like a center for the promotion of data exchanges in the area of research and development for natural resources.
-- Consider transferring maritime technology to developing countries.
-- Make efforts for environmental preservation and biodiversity conservation.
-- Cooperate to assess a potential impact of undersea mining on the environment with technological assistance for environmental preservation.
-- Develop technology to cope with global warming. International orderliness
-- Welcome the U.S.' move to join the United Nations Convention on the Law of the Sea.
-- Develop ocean depths for natural resources, and coordinate the activities of user countries and the interests of coastal countries in exclusive economic zones. TOKYO 00001441 007 OF 013
-- Cooperate in Arctic Ocean development, environmental preservation, etc.

11) U.S. Undersecretary of Defense Flournoy cautious about export of F-22s to Japan MAINICHI (Page 2) (Full) June 26, 2009 Defense Minister Yasukazu Hamada met with visiting U.S. Undersecretary of Defense Michele Flournoy at the Defense Ministry yesterday. Hamada cited the F-22 stealth fighter, which the Defense Ministry has been eager to introduce as the Air Self-Defense Force's next-generation fighter (FX), and said: "Since we do not have sufficient information, we would like to hold working-level talks." On the issue of Japan's FX selection, however, Flournoy said in an interview with the Mainichi Shimbun and other press companies at the U.S. Embassy yesterday: "I told the Japanese side that Japan should make a decision from a broad perspective of what aviation capabilities Japan and the U.S. can jointly maintain." She thus indicated that Japan should not adhere to the idea of introducing the F-22. The U.S. remains cautious about exporting the product in light of its high confidentiality.

12) White House to not approve production of F-22 fighter jets, threatening veto MAINICHI (Page 2) (Full) June 26, 2009 (Masaya Oikawa, Washington) The White House Office of Management and Budget issued a statement on June 24 threatening that President Barack Obama would veto a defense budget authority bill for fiscal 2010 (October 2009 - September 2010) if the legislation includes funds for producing the F-22 advanced stealth fighter. The Department of Defense earlier decided to end the production of the F-22. The bill adopted by the House Armed Services Committee included a provision seeking procurement of an additional 12 F-22 fighters despite the Defense Department's decision to end production of the F-22 after completing 187 aircraft. The legislation also includes a provision calling on Defense Secretary Robert Gates to produce a report specifying expenses and other details if the U.S. decides to develop the export version of the F-22 for Japan. In a related article, Reuters reported that the U.S. Air Force estimated that the total cost for production of a downgraded F-22 to be exported to Japan would be up to 2.3 billion dollars. A source connected to Japan-U.S. relations grumbled, "This is a colossal sum." The said bill also specified that "unless flight safety is ensured, the agreed plan to relocate the U.S. Marine Corps' Futenma Air Station to Camp Swab (in Nago City, Okinawa Prefecture) should not be accepted." But the Office of Management and Budget has called on the House of Representatives to revise this provision.

13) LDP, New Komeito project team to allow MSDF to inspect ships "in special cases" under new law TOKYO 00001441 008 OF 013 MAINICHI (Page 5) (Full) June 26, 2009 Yasushi Sengoku, Naoyuki Inukai The draft of the outline of the ship inspection special measures law to be enacted in light of the UN Security Council sanction resolution against North Korea was revealed on June 25. The Japan Coast Guard (JCG) will be primarily responsible for conducting ship inspections, while "in case of special need," the Maritime Self-Defense Force (MSDF) can be deployed under Article 82 of the SDF Law for maritime security operations. It will mainly be responsible for such activities as intelligence gathering and pursuit of fleeing ships. The Liberal Democratic Party (LDP) and New Komeito will hold a meeting of their project team and approve the draft outline. The draft outline regards cargo inspection as a "law enforcement activity" that the JCG will be primarily responsible for. By inserting the provision "in case of special need," it ensures that the MSDF will be able to engage in maritime security operations in an emergency. While cargo inspection, in effect, will be enforced by the JCG, the final bill may not have a clear provision on who is mainly responsible, in consideration of the opinion of LDP members. The government had explained to the ruling parties that by using the expression "in special cases" instead of spelling out the conditions for MSDF deployment, it wanted to avoid tying its hands in actual operations. Pursuit of suspicious ships might start in Japan and continue up to sea areas in Southeast Asia. In the project team's discussions, it was agreed that ship inspection will require the consent of not only the flag state, but also the ship's captain. If consent is not obtained, the ship will be ordered to sail to a Japanese port.

14) Cargo inspection refusal to be penalized YOMIURI (Page 2) (Abridged) June 26, 2009 The government yesterday released an outline of special legislation for cargo inspections. The Japan Coast Guard will be tasked with ship inspections and the Self-Defense Forces will gather intelligence and identify discovered cargoes. The draft bill establishes charges for evading inspections to penalize the captain of a ship possibly loaded with contrabands in the case of refusal to undergo an inspection. The government will make a cabinet decision on the bill by early July and present it to the Diet. The planned legislation for cargo inspections is relevant to United Nations Security Council Resolution 1874 against North Korea. It is intended to check to see if North Korea-related ships and airplanes carry such contrabands as materials relating to weapons of mass destruction and arms. According to the draft bill, the JCG will inspect ship cargo in Japan's territorial waters and in international waters around Japan. In addition, the draft bill also says that customs will undertake inspections at seaports and airports. TOKYO 00001441 009 OF 013 Meanwhile, the SDF will be tasked with such activities as coordinating with foreign armed services, monitoring sea traffic using patrol aircraft and destroyers, and boarding JCG vessels to identify cargoes.

15) Japanese company paid ransom money to pirates off Somalia ASAHI (Top Play) (Excerpts) June 26, 2009 Waters off Somalia are infested with pirates. Losses inflicted by them on ships connected with Japanese companies have come to light. Six piracy cases occurred in about a year since the fall of 2007. A company involved in one of the six incidents revealed details of what happened, based on the report on the case and actual negotiations with pirates on condition of the name of the company, the time and date of the incident and the amount of ransom were not disclosed. A male foreigner with a business case was on the lookout in a crowded street of a city in North Africa. Another male foreigner approached this man and received the business case from him when they passed each other. The business case contained wads of U.S. dollar notes. It was ransom money the Japanese shipping firm had prepared. It was the price it had to pay for its cargo ship having been captured by pirates. A Scandinavian rescue unit contacted the shipping firm several dozens days before that, noting, "We received an SOS message from your ship." The cargo ship cruising off Somalia was on its way from Southeast Asia to Europe. Several dozens crew members, including those with citizenship of Asian countries, were on board. A company executive telephoned the ship but there was no response. The company then started considering what to do with an attorney and crisis management consultants. The U.S. Navy also contacted the company. Since they spotted two small boats are being tagged by the cargo ship, they asked the company's permission, "Can we attack them?" The company executive said in a shrill nervous voice, "Oh, no. Don't do that! It's dangerous. The ship is carrying dangerous materials." The pirates made the ship anchor off Mogadiscio, the capital of Somalia. They demanded a huge amount of ransom money, according to a company executive. All communications means were destroyed. The pirates used their own satellite phones. The captain groaned out on the other end of the phone, "I am at gunpoint. Be quick, please. Otherwise, they will kill me." According to explanations given later, pirates set up a ladder to board the ship. Eight pirates, armed with guns, climbed aboard the ship. Crewmembers were bunched up together and were being watched with vigilance.

16) Sharp increase in piracy: 125 cases reported this year ASAHI SHIMBUN (Page 1) (Excerpts) June 26, 2009 Navies of the U.S., Britain, the EU, China, Russia and India are cracking down on pirates off Somalia. Japan's Self-Defense Forces (SDF) have also started escorting ships connected to Japan and ships TOKYO 00001441 010 OF 013 carrying Japanese or Japanese cargoes since late March. All ships, including those that had not been covered previously because they are not of Japanese registry although they are related to Japanese companies, will be eligible for escort by MSDF ships under the Anti-Piracy Law, which was enacted on June 19. The damage caused by pirates is becoming increasingly serious. According to the International Maritime Bureau (IMB), based in London, 111 piracy cases, including failed attempts, occurred in that area in 2008, of which 42 vessels were captured. This year, 125 cases were reported as of June 1.The number of ships captured exceeded 25. Only two MSDF escort ships are in operation. There are a significant number of cases in which their operating schedule does not match the cargo ships' shipping schedules. There are growing concerns that that if the coverage of MSDF escorting is expanded, cases could occur in which Japanese ships are not covered. As such, some shipping companies use services offered by a British crisis consultant firm. These services dispatch former Special Air Service members of the British Army to cargo ships only when they cruise off Somalia. Their duties are monitoring pirates and taking action in emergency situations. Customers expect that since they would also become hostages if the ship were captured, the British Navy would rescue the ship.

17) Nakasone in G-8 foreign ministerial to reveal plan to send monitoring team for Afghan presidential election ASAHI (Page 4) (Full) June 26, 2009 (Ukai, Trieste (Italy)) A conference of the Group of Eight (G-8) foreign ministers will open in Trieste on the evening of June 25, in which Foreign Minister Nakasone will reveal the Japanese government's plan to dispatch its team to monitor the presidential election in Afghanistan in August. On the North Korean issue, Nakasone will stress the need for the G-8 countries to implement the sanction resolution adopted against the North by the UN Security Council following its latest nuclear test. The conference will be held until the 27th. With the Iran and Pakistan issues high on the agenda, the G-8 foreign ministerial will hold a meeting joined by the Iranian and Pakistani foreign ministers on the afternoon of the second day and a meeting inviting representatives from countries surrounding the two countries. Focusing on the current serious state of corruption of the regime ruled by Hamid Karzai, the G-8 foreign ministers share the view that the fair implementation of the election will be the first important step toward improving national security in that nation. Japan is willing to dispatch an election-monitoring team to Afghanistan. Since the security situation there is still unstable, the government intends to decide on the size and composition of the envisioned team after carefully watching the situation until the last moment.

18) Three Japanese companies, including ENEOS, to acquire rights to develop Iraqi oil field YOMIURI (Top Play) (Excerpts) TOKYO 00001441 011 OF 013 June 26, 2009 It was learned on June 25 that three Japanese companies, including Nippon Oil Corporation (ENEOS), the largest oil wholesaler, entered final adjustments with the Iraqi side with the possibility of acquiring rights to develop the Nasiriyah oil field in southern Iraq. They will likely reach an agreement as early as July. The three companies expect daily production of 600,000 barrels or more than 10 PERCENT of Japan's crude oil consumption two years after acquiring the stake. The Nasiriyah oil field will likely become the largest-ever project to be developed by Japan. It will have major significance for Japan's energy security. Among oil fields independently developed by Japan, the Khafji oil field, whose development right Arabian Oil Company acquired in 1957, was the largest with daily output of 300,000 barrels. The consortium formed by ENEOS, Inpex Corporation, a leading oil development company, and JGC Corporation, a major plant engineering firm, has entered the final stage of negotiations to sign a contract to develop an oil field in part of the mining area belonging to the Nasiriyah oil field. They will aim to produce 150,000 barrels a day for two years after the launch of drilling and 600,000 barrels thereafter. The project cost will likely reach 1 trillion yen, including the construction of a refinery and a power plant. The government will assist the three companies through the Japan Bank for International Cooperation (JBIC). The three companies want to clinch a deal after making adjustments on a long-term capital procurement plan for the project and international measures to support the reconstruction of Iraq.

19) Prime Minister Aso: Lower House dissolution will take place in not-so-distant future MAINICHI (Page 1) (Full) June 26, 2009 Prime Minister Taro Aso yesterday held a press conference at the Japan National Press Club in Tokyo. When asked when he would dissolve the House of Representatives and call a general election, Aso said: "I think that will occur in the not-so-distant future." He implied the possibility of dissolving the Lower House around the Tokyo Metropolitan Assembly election (on July 12, the official campaign for which will kick off on July 3) and calling a snap election in early August. Asked about moves in the Liberal Democratic Party (LDP) calling for speeding up the LDP presidential race, he said: "Holding a presidential election at a time when the term is about to expire would have a negative impact on the party," stressing his negative view toward the idea of moving up the election. Asked about the calls for a cabinet shuffle in the LDP, Aso said: "I don't think the cabinet should be shuffled immediately. All my cabinet members have been doing their best." However, it is likely that Aso will end the present situation in which Kaoru Yosano and Tsutomu Sato concurrently serve in more than two minister posts. Asked about the possibility of changing the LDP executives, Aso said: "Different people have different views. I am TOKYO 00001441 012 OF 013 listening to them respectfully."

20) Prime minister tries to stem "oust Aso" moves, hints at dissolving Diet "before Tokyo Metropolitan Assembly election" NIKKEI (Page 2) (Full) June 26, 2009 The war of nerves in the government and the ruling parties over the schedule for Diet dissolution to make way for a general election has entered the final phase. At his news conference at the Japan National Press Club on June 25, Prime Minister Taro Aso repeatedly stressed that he will be the one to dissolve the House of Representatives. By stating that dissolution before the Tokyo Metropolitan Assembly election on July 12 is possible, he tried to demonstrate that he holds the initiative. The prime minister has also begun considering making changes in the Liberal Democratic Party (LDP) leadership and additional appointments to the cabinet, but the reality in the party is that "oust Aso" moves are rife behind the scenes. The outcome is still unpredictable. The prime minister denied that he has any responsibility if the LDP is defeated both in the Shizuoka gubernatorial race on July 5 and the Tokyo election on July 12, saying: "Local elections are absolutely unrelated to national politics." He made clear his opposition to holding the LDP presidential election, scheduled for September, early. "Holding another presidential election will be counterproductive." A senior LDP official who has met the prime minister recently reveals that: "The prime minister is full of fighting spirit. He has absolutely no intention to resign voluntarily." It is generally believed that Aso is bullish because he thinks "the LDP will not lose the local elections." (senior LDP official) At a meeting with party executives on the evening of June 24, Aso was reportedly also confident about the ruling parties maintaining a majority in the Tokyo Metropolitan Assembly. The purpose of his working on personnel changes in the LDP leadership and making additional appointments to the cabinet is mainly for building up "combat readiness" for the Lower House election by appointing a secretary general
-- the party's chief executive officer
-- who is capable of competing with DPJ Secretary General Katsuya Okada and by starting serious efforts to draft the LDP's manifesto (campaign pledges). However, if the cabinet support rating remains low despite these efforts, the LDP is unlikely to win the Lower House election. In reality, the party's only options are to wage a negative campaign against the DPJ and to wait for the DPJ's blunders. When asked whether he is confident of winning in the Lower House election, the prime minister said: "I believe we must win," as if talking to himself.

21) Idea of holding LDP presidential election on July 20 floated SANKEI (Page 5) (Full) June 26, 2009 The latest idea being floated in the Liberal Democratic Party (LDP) is to hold the LDP presidential election on July 20, much earlier TOKYO 00001441 013 OF 013 than the scheduled September date, in order to replace Prime Minister Taro Aso (also the LDP president). Assuming that the LDP might lose the July 12 Tokyo Metropolitan Assembly election, some LDP lawmakers hope to see the LDP go into the next House of Representatives election under the leadership of a new president. The Diet vote on the prime minister would then be held before July 28, when the current Diet session ends. As Aso has clearly denied the possibility of moving up the presidential race, it is unclear whether this plan can be accomplished. A mid-level LDP member who is calling for speeding up the presidency said: "We are now taking action with an eye on the possibility of a July 20 presidential election. I'm sure that the drive to dump Aso will intensify after the Tokyo assembly election." If the Democratic Party of Japan becomes the number one party in the Tokyo Assembly after the election, LDP members see Aso as being forced to leave office. A Machimura faction member even made this comment: "One of the LDP executives mentioned a July 20 election." A government source explained: "When considering that the ongoing Diet session runs out on June 28, in order for the new LDP president to be elected prime minister by a Diet vote, July 20 is the last chance." Meanwhile, Lower House member Koichiro Shimizu and other LDP lawmakers, who have worked on collecting signatures to hold a presidential election ahead of schedule, held a first meeting yesterday. However, only four lawmakers, including Shimizu, attended the meeting and two of the four walked out, expressing their opposition to signing. Shimizu told reporters: "We don't want to negatively affect the outcome of the Tokyo assembly election," indicating that the group will freeze its activity before the end of the Tokyo election. ZUMWALT