JAPANESE MORNING PRESS HIGHLIGHTS 03/01/06

UNCLAS SECTION 01 OF 10 TOKYO 001085

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SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 03/01/06


Index:

1) Top headlines
2) Editorials
3) Prime Minister's daily schedule

4) Iranian Foreign Minister Mottaki's talks with Prime Minister
Koizumi see no meeting of minds on nuclear issue; Sanctions now
loom on horizon

5) Tokyo district court orders Foreign Minister to disclose
secret slush fund

6) More leaks revealed of MSDF data through the Internet

Economic issues:
7) In Diet debate over income disparity issue, Koizumi stresses
"light" at end of reform tunnel, while opposition sees "dark"
results of economic reforms
8) Agriculture Minister Nakagawa ready to address BSE issue at
WTO 6-party ministerial meeting
9) ODA will have control tower in the cabinet; JBIC will keep
its identity

Minshuto's (Democratic Party of Japan) public shaming:
10) Minshuto's Nagata makes apology of sorts for fake e-mail;
Noda quits as Diet affairs chairman
11) Prime Minister Koizumi: I don't understand what he was
apologizing for?
12) It will be a long time before Minshuto head Maehara recovers
trust in his leadership after e-mail fiasco
13) Minshuto members blast party leadership for e-mail fiasco
14) Ruling camp raps apology as insufficient, vows further
action in Diet

Articles:

1) TOP HEADLINES

Asahi, Mainichi, Yomiuri, Sankei & Tokyo Shimbun:
Minshuto (DPJ) apologizes for e-mail; Diet affairs chief Noda
resigns but President Maehara stays on; Six-month suspension of
party membership for Nagata

Nihon Keizai:
BOJ mulling adoption of policy of holding down interest rates
before removing easy money policy, aiming to cap overnight
interest rate at 0.1% and maintain the long-term government bond
purchase framework

2) EDITORIALS

Asahi:
(1) Minshuto: Can it survive under the current leadership?
(2) Regional system (reorganization of prefectures into larger
regional blocs with devolution of central government power): No
prospects without decentralization

Mainichi:
(1) Minshuto: This does not put an end to the e-mail fiasco
(2) Iran's nuclear ambitions: Japan should strive to avoid
sanctions

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Yomiuri:
(1) Lawmaker Nagata's apology: More explanation needed
(2) ODA reform: Can this change the vertically divided
bureaucracy?

Nihon Keizai:
(1) Lamentable lawmaker Nagata and Minshuto
(2) Decentralization is necessary for regional system

Sankei:
(1) Minshuto: Poor press conference did not put an end to the e-
mail mess
(2) Society of disparity: Need to verify before labeling

Tokyo Shimbun:
(1) Minshuto's apology: Delay deepens the wound
(2) ODA reform: Responsibility of cabinet members will increase

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, February 28

NIHON KEIZAI (Page 2) (Full)
March 1, 2006

08:00
Met Deputy Chief Cabinet Secretary Nagase at Kantei.

08:31
Attended a cabinet meeting. Foreign Minister Aso stayed on.

09:00
Attended a Lower House Budget Committee session.

12:08
Returned to Kantei.

14:14
Met Aso, Deputy Foreign Minister Nishida, Middle Eastern and
African Affairs Bureau Director General Yoshikawa and others,
followed by Iranian Foreign Minister Mottaki.

15:30
Met LDP Secretary General Takebe, Doshu System Research Council
Secretary General Ishizaki and others.

SIPDIS

17:18
Attended a Council for Science and Technology Policy meeting.

18:17
Received recommendations from Local System Research Council
Chairman Moroi.

19:38
Returned to his residence.

4) Government begins to look into ways to secure crude oil with
eye on economic sanctions: Talks between prime minister and
Iranian foreign minister fail

SANKEI (Page 5) (Full)

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March 1, 2006

Prime Minister Junichiro Koizumi yesterday met with visiting
Iranian Foreign Minister Mottaki at the Prime Minister's Official
Residence (Kantei). During the talks, he called on Iran's
government to once again suspend its uranium enrichment
activities. However, the meeting ended in failure with Mottaki
claiming Iran's right to the peaceful use of nuclear power. Since
Iran stands firm on its stance of carrying on with its nuclear
development program, the government has concluded that economic
sanctions against Iran are becoming more likely. The Foreign
Ministry (MOFA) and the Ministry of Economy, Trade, and Industry
(METI) have started looking into ways to secure crude oil in
readiness for possible economic sanctions.

During the meeting, Koizumi asked Iran to suspend its uranium
enrichment activities, noting: "I would like Iran to win the
trust of the international community by all means. The world is
watching Iran's moves." Mottaki, however, simply said, "I would
like Japan to cooperate with Iran so that it will not receive
discriminatory treatment over its right to the peaceful use of
nuclear power."

The International Atomic Energy Agency (IAEA) has already
referred Iran's nuclear development issue to the UN Security
Council. The UNSC will then decide whether to take concrete
actions, including economic sanctions against Iran, after the
IAEA board meeting on Mar. 6.

In the meantime, the government is determined to watch the fate
of talks between Russia and Iran, because it has presented along
with Russia a plan for Iran to pursue uranium enrichment
activities in Russia.

The US has started examining the possible impact on the global
economy of overall sanctions against Iran, including an embargo
on its oil exports. Secretary of State Rice has visited Middle
East nations, such as Saudi Arabia and Egypt, in a bid to tighten
the noose, as a senior MOFA official noted.

Some government officials are calling for a cautious approach to
economic sanctions, as Japan relies on Iran for 15% of its oil
imports and is involved in the Azadegan oil field development, in
which it has 75% stake. Chief Cabinet Secretary Abe told
reporters yesterday that Japan would make every effort for stable
procurement of energy in the event crude oil imports from Iran
become difficult.

During the 1979 American Embassy siege in Iran, the US called on
various countries to impose economic embargos on Iran, but some
Japanese companies bought a large quantity of crude oil from it,
leading to fierce criticism of Japan in the US.

For this reason, other government officials take the position
that Prime Minister Koizumi and Foreign Minister Aso tried to
directly persuade Iran, so Japan did what it should do, and it is
better to consider ways to secure crude oil based on the
assumption that Japan will support economic sanctions.

5) Tokyo District Court orders Foreign Ministry to disclose how
discretionary diplomatic funds were spent


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YOMIURI (Page 1) (Full)
March 1, 2006

The Tokyo District Court handed down a decision yesterday on a
lawsuit filed by the Joho Kokai Shimin Center, a Tokyo-based
nonprofit organization, demanding that the Foreign Ministry
rescind its earlier decision and disclose discretionary
diplomatic funds spent by the Ministry's Secretariat and Japanese
embassies in the United States, France, and others countries.
Presiding Judge Tasuku Daimon ordered the ministry to totally
disclose documents on 1,017 cases excluding those already
disclosed, stating, "Discretionary diplomatic funds were used on
liquors and Japanese paintings outside the original purposes.
Ambiguity remains about how such funds were used." It was the
first time for a court to make a decision on the disclosure of
classified diplomatic funds.

The ministry has not disclosed any data saying that classified
diplomatic funds were for collecting information and that
disclosing how the money was spent might have an adverse effect
on the country's relations and talks with other countries. The
court concluded: "The ministry is not allowed to conceal all
information from the public without studying individual cases to
find out if disclose would have an adverse effect. Grounds for
not disclosing information have not been established fully."

In April 2001, the center requested the Foreign Ministry to
disclose documents on the classified funds spent between February
and March 2000. The minister turned down the request. Following
the lawsuit, the ministry disclosed in April 2004 documents on 52
cases relating to reception expenses, the purchase of Japanese
paintings, and other matters. The court ruled the ministry to
disclose information to include additional 45 cases.

An official of the Foreign Ministry Information Disclosure Office
commented, "It is regrettable that the state's opinion was turned
down. We would like to determine future measures through talks
with relevant organs."

6) MSDF data also leaked via computers belonging to five members,
including an ensign; Too much confidence in their computers due
to anti-virus software

MAINICHI (Page 30) (Full)
March 1, 2006

Maritime Self-Defense Force (MSDF) data, including confidential
information, have also leaked out to the Internet via personal
computers owned by five MSDF officers, including an ensign,
sources revealed yesterday. The MSDF has prohibited its personnel
from bringing memory devices, such as personal computers and CD-
ROMs, into the workplace.

The new leaks occurred through personal computers belonging to
five MSDF personnel, including an ensign, a petty officer 3rd
class, and a signal operator. The five members stored MSDF
information, including confidential data, on CD-ROMs and other
media and took them home to download to their personal computers
using file-sharing software, such as Winny. As a result, their
computers became infected with a virus. The leaked confidential
information included secret cables between destroyers and bases,
call signs, and personal data,

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The MSDF trained its personnel in December and January to raise
their awareness against Winny and other computer programs.
Despite that, the MSDF confirmed Jan. 21 that vast amounts of
information had leaked to the Internet via a personal computer
owned by a 41-year-old chief petty officer aboard the destroyer
Asayuki based at the Sasebo base. The chief petty officer and
other MSDF members reportedly said, "I thought my computer was
safe because anti-virus software was installed," or "I was
collecting data for the promotion examination and my studies."

7) Equality gap: Prime minister stresses bright side of reforms
during intensive deliberations at Budget Committee meeting

YOMIURI (Page 4) (Excerpts)
March 1, 2006

The Lower House Budget Committee yesterday held intensive
deliberations with the focus on social or income disparity as a
result of structural reforms promoted by Prime Minister Koizumi.
The opposition camp urged the government to take countermeasures,
by citing actual cases of the widening gap and the "dark side" of
excessive reform initiatives. The prime minister rejected the
criticism, "Social gaps are not always a bad thing."

Ritsuo Hosokawa of the Democratic Party of Japan (DPJ = Minshuto)
brought up the taxi industry as the dark side of reforms. He
pointed out, "Due the easing of the Road Transport Law, the
number of taxis has increased by about 14,000 over the past three
years, but the number of passengers has declined. The income of
taxi drivers is 3.08 million yen a year. This is less than half
the average income of workers in industries across the board.

Koizumi rebutted, "Some customers are pleased at improved
services and reduced fares." He continued, "Working conditions
are set by executive officers. It is not possible to make a
sweeping judgment whether the deregulation was good or bad."

Hosokawa remained unyielding and pointed out, "Traffic accidents
involving taxies have also increased." He thus succeeded in
making Land, Infrastructure and Transport Minister Kitagawa
reply, "We will conduct a follow-up survey of deregulation
without fail."

Interpellators thus made efforts to be persuasive, by citing
specific examples of the dark side of reforms.

Yorihisa Matsuno of the DPJ called for balanced city planning,
noting, "The bright side is that large-size shopping malls were
built under a free economy. On the other hand, traditional
shopping districts are in desperate shape." Kitagawa pledged to
take measures.

8) Nakagawa reveals plan of holding WTO 6-party ministerial, with
BSE on agenda

ASAHI (Page 12) (full)
March 1, 2006

In a press conference held after a cabinet meeting yesterday,
Agriculture, Forestry and Fisheries Minister Nakagawa said that
cabinet ministers from six economies with influence in World

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Trade Organization (WTO) talks would meet in London in mid-March.
The six economies, including Japan, the US, and the European
Union (EU),will meet in an effort to forge ahead with the
stagnant WTO multilateral trade negotiations (Doha Round).
Nakagawa added: "I would like to attend the meeting without fail
in order to guard Japan's position in agriculture and other
sectors, as well as to promote global trade and economy."

In reference to Japan's re-imposition of a ban on US beef
imports, Nakagawa stated: "It is important for the two countries
to exchange frank views." He implied that he would meet
separately with US Agriculture Secretary Johanns and the US Trade
Representative (USTR) on the sidelines of the ministerial in
London.

9) Final report on ODA reform suggests setting up control tower
in Cabinet Office, keeping JBIC name

ASAHI (Page 3) (Excerpts)
March 1, 2006

The government's Study Group on Overseas Economic Cooperation,
chaired by former Attorney General Akio Harada, compiled its
final report and submitted it to Chief Cabinet Secretary Shinzo
Abe yesterday. Under the current system, 13 government ministries
and agencies engage in implementing their own official
development assistance (ODA) projects separately. But the report
proposes creating in the Cabinet Office an Overseas Economic
Cooperation Council (tentative name) composed of five responsible
cabinet ministers as the control tower for ODA policy. The report
also suggests integrating the international financing section in
the Japan Bank for International Cooperation (JBIC) into a
government-affiliated financial institution to be newly
established and also its yen-loan section into the Japan
International Cooperation Agency (JICA).

Based on this report, the government will hurriedly set up the
new body.

The report stipulates that three ODA functions - yen loans,
technical cooperation, and grant aid - should be centralized at
JICA. The study group also decided to make the international
financing section independent as an institute while retaining the
name "JBIC." The panel thus gave consideration to those against a
plan to dissolve the JBIC, but its specific systematic designing
will be discussed in the government.

On the yen-loan business, the report specifies: (1) The current
consultations and cooperation system involving various government
agencies should be retained; and (2) the possibility of
establishing a liaison consultation involving both the
international financing and yen-loan sections in JBIC should be
studied. Under this plan, the Foreign Ministry, the Finance
Ministry, and the Economy, Trade, and Industry Ministry will
jointly take charge of the yen-loan business.

10) Minshuto (DPJ) apologizes for fake e-mail; Diet affairs chief
Noda resigns but President Maehara stays on; Six-month suspension
of party membership for Nagata

ASAHI (Top play) (Lead paragraph)
March 1, 2006

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Meeting the press yesterday, Minshuto (Democratic Party of Japan)
President Maehara apologized for the controversial e-mail in
terms of its authenticity: "We've concluded that (the e-mail) was
fake. I sincerely apologize for having brought it up in the Diet
questioning." He backtracked on all his party's explanations made
in pursuing the e-mail, stating he had believed the e-mail was
highly reliable. Although Maehara had been considering stepping
down as party head, he decided to stay on for now. The party
leadership accepted resignations from Yoshihiko Noda, chairman of
the Diet Affairs Committee, and Osamu Fujimura, vice chairman of
the committee, and it suspended House of Representatives member
Hisayasu Nagata's party membership for six months as a
disciplinary action. Maehara wants no other party executives to
resign to take the responsibility for the e-mail fiasco, but he
will be certain to control over the party rank and file, given
that Secretary General Yukio Hatoyama intends to resign at an
appropriate time.

11) Koizumi on Minshuto Nagata's apology in press conference over
e-mail fiasco: I don't understand for what he was apologizing?

MAINICHI (Page 3) (Full)
March 1, 2006

Prime Minister Junichiro Koizumi harshly criticized Democratic
Party of Japan (Minshuto) member Hisayasu Nagata last night over
the press conference he held to apologize for a charge against
the LDP that was later found to be incorrect. Koizumi said:

"I really don't understand for what he was apologizing and for
what he is sorry. Minshuto and its leader (Seiji) Maehara must be
held more responsible."

Asked about Maehara's decision to stay on, Koizumi said: "That is
what Minshuto decided." He replied to questions by reporters at
the Prime Minister's Official residence.

Liberal Democratic Party Secretary General Tsutomu Takebe
revealed last night that his second son was looking into the
possibility of filing both criminal and civil lawsuits against
Nagata.

12) Long way to go for Maehara-led Minshuto (DPJ) to restore
public trust

NIHON KEIZAI (Page 3) (Excerpts)
March 1, 2006

The alleged e-mail that had sent the Diet into a frenzy was found
to be fake. To take responsibility for this fiasco, Minshuto
(Democratic Party of Japan) held a press conference to offer an
apology and accepted its Diet Affairs Committee Chairman
Yoshihiko Noda's resignation. But Minshuto is unsure whether
these measures will be enough to put an end to the e-mail issue.
In fact, the ruling parties are raising objections to what
Minshuto said in the press conference. In addition, it is not an
easy task to read how the public will respond. Yesterday,
Minshuto President Seiji Maehara again declared his intention to
stay on, but he is likely to have difficulty in keeping the party
from losing its cohesiveness. It will not be easy for the party
to regain public trust.

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"I was seriously looking into the option of resigning," Maehara
said at the outset of a press briefing late yesterday, bowing
deeply. But the question of who should take the responsibility
for the e-mail fiasco was rocking the party harder than it was
Maehara. Yesterday morning, Maehara met with Secretary General
Yukio Hatoyama, who had been trying to settle this e-mail mess.
Hatoyama told Maehara he intended to step down.

Maehara persuaded Hatoyama to stay on, telling him, "If you
resign, I will have to resign, too." Both leaders insisted on
resigning. Hatoyama then said, "If that is the case, the
leadership would resign en masse, wouldn't it?" Even in the party
executive meeting held after their one-on-one meeting, Maehara
and Hatoyama both continued to express their intention to resign,
whether they really intended to or this was just a ploy. Hatoyama
gave in at last. But Noda, who had also indicated his intention
to resign from his post, was firm.

The party leadership had made extra efforts to avoid a domino
effect of resignations on Maehara and other leaders immediately
after House of Representatives member Hisayasu Nagata revealed
his intention to resign as a Diet member. The party executives
solidified the party position of not allowing Nagata to resign as
a Diet member and keeping the present leadership lineup. But the
mood inside and outside of the party was severe.

The tide of opinion in the party is not that Maehara should
resign. One reason for that is there is no one to replace him.
Even if someone replaces Maehara, the tenure of the party
president expires at the end of September. There are few
advantages for a replacement. Hatoyama has indicated his
intention to resign. This, too, is analyzed as a signal that he
will distance himself from Maehara sooner or later.

13) Livedoor e-mail uproar: Criticism arises in Minshuto general
meeting

MAINICHI (Page 5) (Excerpts)
March 1, 2006

The largest opposition party Minshuto (Democratic Party of Japan)
yesterday evening held a meeting of its all Diet members. In the
meeting, party President Seiji Maehara explained the development
of the e-mail issue lawmaker Hisayasu Nagata raised in the Diet
when he claimed that Livedoor Co. founder Takafumi Horie ordered
a payment to Liberal Democratic Party (LDP) Secretary General
Tsutomu Takebe's son. Maehara also announced the party's punitive

SIPDIS
measures, including the resignation of Diet Affairs Committee
Chairman Yoshihiko Noda. He then offered an apology for causing
the uproar. During the 90-minute meeting, many members raised
views criticizing not only the credibility of the e-mail but also
Maehara's remarks. Following are major views raised in the
meeting:

Maehara: The e-mail was not sent by Takafumi Horie, who has been
arrested for violating securities law. We cannot assess (its
authenticity). Citing the copy of the e-mail without conclusive
evidence, (Nagata) posed questions and accused LDP Secretary
General Takebe and his son. I sincerely apologize to Mr. Takebe
and his son, as well as the public. We will withdraw the request
to exercise the right of a Diet member to investigate state

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affairs. I have decided to remain in the presidential post to
examine my responsibility. I then will make a fresh start. I
accepted the resignation of Diet Affairs Committee Chairman Noda.
I'm torn up inside.

Takeo Nishioka: It is not necessary for the party head and the
Diet affairs chief to quit their posts. But in taking up an issue
that is not really connected to politics, you should have secured
proof. President Maehara, you should be careful about your
remarks. You have said that no party members have criticized the
executive, just the media, but you lack awareness. Everybody has
offered an apology in their own constituency on your behalf. I
want you to realize this and apologize for it.

Tetsundo Iwakuni: I want the party head and secretary general to
realize that your remarks influenced Nagata.

Yoshinori Suematsu: It is important to take responsibility. If we
put an end to the matter without taking responsibility, the
public will say that we are behaving like children. (The remarks
by the party head) damaged the party further. I want you to do
your best.

Yoko Komiya: In order to shed light on the issue, we should set
up a project team.

Koichi Haraguchi: We should not shrink back, but let us fulfill
our duties.

Toshio Ogawa: The fundamental problem is that our party has no
crisis management capabilities. The public will not entrust us
with the reins of government. We should overcome the situation
with one mind.

14) Livedoor e-mail fiasco: Ruling camp dissatisfied with
Minshuto lawmaker Nagata's apology: Plans to use it to attack the
main opposition party

MAINICHI (Page 5) (Excerpts)
March 1, 2006

There is a growing backlash in the government and ruling parties
over the way Minshuto (Democratic Party of Japan) lawmaker
Hisayasu Nagata apologized for failing to prove his allegation in
the Diet when he cited an e-mail charging Liberal Democratic
Party (LDP) Secretary General Tsutomu Takebe's son with taking a
payment from former Livedoor President Takafumi Horie. Chief
Cabinet Secretary Shinzo Abe stormed, "Although Nagata made an
apology It is highly regrettable that he made remarks indicating
there still remain suspicions about flows of money."

In addition to the submission of a punitive motion against
Nagata, the ruling coalition intends to pursue the responsibility
of the largest opposition party's executive, including President
Seiji Maehara. Some ruling camp members think that it would be
better to drag out debate on the e-mail issue at the Diet with an
eye on the second half of the ongoing regular Diet session. They
are considering using Nagata's apology to attack Minshuto.

Minshuto Secretary General Yukio Hatoyama last night asked LDP
Deputy Secretary General Hiromichi Watanabe to arrange for him a
meeting with Takebe. Watanabe, however, turned down the request,

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by saying, "Mr. Nagata did not really apologize. He should have
made an apology in a public appearance."

Minshuto released a statement last night that the e-mail in
question was fake. With this regard, a senior LDP member made a
cynical comment: "If they said so half a day before, they would
not have been attacked. They have taken only follow-up measures.
They lack a crisis management awareness."

Prior to the press conferences by Minshuto members, the LDP make
such requests as explanation on whether the e-mail is real or
fake, apologies for Takebe's son, Takebe and those accused.
However, Nagata said in the press briefing as to the authenticity
of the e-mail, "I have obtained certain facts but I'm still
investigating it." Nagata's remarks have created a stir even
among LDP moderates. General Council Chairman Fumio Kyuma
commented: "He should have made an apology that would satisfy the
public."

SCHIEFFER