JAPANESE MORNING PRESS HIGHLIGHTS 03/06/06-2

UNCLAS SECTION 01 OF 09 TOKYO 001169

SIPDIS

SIPDIS

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SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 03/06/06-2


Index:

1) Iwakuni referendum, announced yesterday, to query populace
on accepting carrier-jets from Atsugi
2) Though government is watching Iwakuni referendum, results
may not affect the USFJ realignment process
3) New radar at Aomori base designed to deal with North Korean
ballistic missiles

Foreign policy issues:
4) Aiming at checking China, Japan forging security ties with
India, starting with joint drill in Indian Ocean
5) Former chief cabinet secretary Fukuda calls for repairing
ties with China and South Korea
6) Japan's UN reform proposal would make Russia, China pay a
fair share of UN budget

7) Poll shows record 65% favoring constitutional revision

8) New Komeito readying for Upper House election by sweeping
change of top party posts

Minshuto in turmoil:
9) New Minshuto Diet affairs chair Watanabe sets off storm of
denials by suggesting early election of party president
10) As Minshuto mulls early election of party head, names of
Hatoyama, Ozawa being floated already as Maehara replacement

Articles:

1) TOP HEADLINES

Asahi:
Financial Services Agency to tighten regulations on excessive
loans

Mainichi & Yomiuri:
China's National People's Congress comes up with a new five-year
plan predicting it will rank third in GDP with an annual growth
rate of 7.5% on average

Nihon Keizai:
Toshiba to construct a new flash memory factory in Yokkaichi City
by investing 50 billion yen

Sankei:
Abductees' families, including Yokota's, to testify before US
Congress, aiming to raise international pressure

Tokyo Shimbun:
GM to sell its-held Suzuki shares in dissolving capital tie-up

2) EDITORIALS

Asahi:
(1) China's National People's Congress: Farmers in trouble with
high medical expenses
(2) Reform for decentralization of power: Local allocation tax
comes into focus

Mainichi:
(1) ODA reform settled: Strategy is the prime minister's job

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(2) Taiwan's pro-independence platform: Can legal arguments help
the president restore public support?

Yomiuri:
(1) Budget bill approved: Keep tight rein on financial
reconstruction
(2) Soccer lottery: Can it break free of bureaucracy?

Nihon Keizai:
Do not misread change in nuclear policy

Sankei:
(1) Attitudes of senior high school students: Aspirations are
necessary
(2) Bird flu: Swift information disclosure is essential

Tokyo Shimbun:
(1) Doshu system (reorganization of prefectures into larger
regional blocs with devolution of central government power):
Debate should start with propriety of doshu system
(2) Interest rate caps: Why is there is no end to cases of
heavily indebted people?

3) Japan still has no exit strategy from Iraq even though time
for withdrawal of troops is drawing close; US is trying to
constrain exit moves of Japan, Britain, Australia

ASAHI (Top play) (Full)
March 4, 2006

When will Japan actually exit Iraq? The Japanese government is
finding itself facing a difficult decision in setting a timetable
for the Ground Self-Defense Force (GSDF) troops to leave Samawah
in southern Iraq, where they are not deployed. Although the
British conceive a complete withdrawal of their forces by June,
the United States, which would like to first see the
establishment of the new Iraqi government, is trying to constrain
the British government from moving toward that goal. However, the
move toward establishing a new Iraqi government is not
progressing as armed conflict spreads across the country. The
Japanese government would like to wait until the last minute to
make its decision, and one proposal being floated is to withdraw
the GSDF troops temporarily to Kuwait and wait there until the
new Iraqi government is established.

Quadrilateral conference

Britain: "The British troops will complete their training of
Iraqi forces in mid-May. Once that condition is fulfilled, we
will complete our troop withdrawal by June."

US: "You should more carefully observe the Iraqi political
process."

On Feb. 24, such a gap in views was revealed between US and
British delegates to a quadrilateral meeting in London that also
included Japan and Australia. The Australian delegate stated:
"Australian forces will move in tandem with Japan's Self-Defense
Forces." If that is the case, then when will Japan withdraw?

Japan: "We would like to carefully observe public security, the
political process, the reconstruction assistance situation, and

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moves of the British and Australian forces."

According to sources in the Japanese government, the delegation,
consisting of division-director level officials from the Foreign
Ministry (MOFA),Defense Agency (JDA),and the Cabinet
Secretariat avoided to the end any mention of a withdrawal

SIPDIS
timetable at the conference.

The first time that Britain, which is responsible for security in
southern Iraq, mentioned withdrawal was in talks last September.
The reason was because the British were being pressed to
strengthen their forces deployed to Afghanistan between this
spring and summer. America immediately responded: "Iraq will have
a national assembly election in December (2005). Do you think it
is acceptable to let Iraq fall apart?" The discussion ended
there.

The US, though, is no longer saying "no" to withdrawal, according
to a JDA senior official. A senior MOFA official analyzed: "The
US, too, realizes that the game will be won or lost in Iraq in
the next several months."

However, of the 28 countries now deploying troops to Iraq, not a
one has announced that it will withdraw. The British, as well,
are no different than the Japanese in giving priority to
relations with the US. At first, the British talked about
February as the date for starting to withdraw but recently, they
have started to say, "We don't mind if it is April." A high-level
Japanese official sees March as no longer the date for the start
of Japan's pullout. Until the new government, now being prepared,
is launched, the British troops will not start to withdraw,
according to informed sources.

The London meeting ended without setting the next date. On March
18, there will be a security dialogue in Australia that will
include the US and Japan. Foreign Minister Aso noted: "Chances
are high that the withdrawal of (ground troops) will be
discussed." A senior SDF office also said, "It will take a
political judgment at this point," indicating that Prime Minister
Koizumi is expected to make the final decision.

Scenario

"After comprehensively considering various factors, Japan will
make a judgment on its own." On the evening of March 3, Prime
Minister Koizumi made this remark to the press corps that was
trying to nail down a withdrawal timetable. A government sources
stated: "Koizumi's psychology is complicated. Though he hates to
be told he is blindly following the US lead, he also does not
want to damage the Japan-US alliance."

A judgment on Japan's own, though, would not be a simple thing.
About the time when the British and the Australian troops are
getting ready to pull out, the JDA chief would obtain the Prime
Minister's approval and issue a withdrawal order telling the SDF
to pull up stakes in Samawah, "while giving their regrets to the
local community," according to a senior officer. This is the
optimum scenario envisioned by the government.

However, it will take two to three months to completely pull out.
If according to the US' desire, the political situation,
including the establishment of a new government, is watched

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carefully, the withdrawal will not line up with the plans of the
British government, which would pull out its troops completely by
June.

At this point, as a stopgap measure, a proposal has come up among
some Japanese officials. It involves not waiting for the Tokyo
withdrawal order per se, but to let the local commander on his
own judgment decide to move the GSDF troops to Kuwait. When the
new government is installed, the Prime Minister would then order
a withdrawal. The JDA chief then would issue the final order.

However, several senior high-level government officials point
out: "Will there be an explanation of this to domestic and
foreign audiences?" and "Will there be a problem from the
standpoint of civilian control?"

If such is the case, and the withdrawal timetable cannot be
shortened, another proposal being floated is to send a security
support unit to provide additional coverage in Samawah.

However, if the basic plan that sets the maximum number of troops
at 600 is exceeded, there would need to be prior cabinet approval
of a change in the plan. Dispatching troops for the sake of
expediting withdrawal has the possibility of leading to a de
facto withdrawal announcement, according to a Cabinet Secretariat
official.

The government at this point only has a policy course of avoiding
being the first to announce the intention to withdraw from Iraq,
according to a senior JDA official.

4) Japan-US deputy-director-level talks to start tomorrow to find
common ground for US force realignment; Deadline approaching for
tough issues, including relocation costs, Yokota RAPCON

NIHON KEIZAI (Page 2) (Full)
March 6, 2006

Talks between senior foreign and defense officials of Japan and
the United States are scheduled to open in Hawaii tomorrow to
discuss the realignment of US forces in Japan. The talks are
expected to center on the two countries' shares of the expenses
for the relocation of the US Marines from Okinawa to Guam and the
return to Japan of the right to air traffic control over Yokota,
commonly called Yokota RAPCON. Bilateral coordination is in the
final stretch with a view to producing their final report before
the end of this month.

On Feb. 4, Defense Facilities Administration Agency Director
General Iwao Kitahara asked Okinawa Gov. Keiichi Inamine for his
support for the planned relocation of the US Marine Corps'
Futenma Air Station. But the governor flatly rejected the
request, saying, "We cannot accept such a plan."

The US has come up with a plan to relocate up to 8,000 US Marines
from Okinawa to Guam, an increase of 1,000 from the number
specified in the interim report released last October. The US has
also asked Japan to bear a large portion of the relocation cost
estimated at 8 billion dollars, or 940 billion yen. Japan's slow
reaction to the Futenma relocation plan has elicited an
extravagant price tag from the US. Although Japan plans to sound
out the US on compressed costs and installments, there is no

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prospect that the US will accept Japan's proposal.

Finding a relocation site for 12 aerial tankers based at Futenma
Air Station is another challenging task. Although the interim
report says that the Maritime Self-Defense Force's Kanoya base in
Kagoshima Prefecture should be studied on a priority basis, the
US has begun calling for redeployment to Iwakuni Air Station in
Yamaguchi Prefecture. In addition, meeting with opposition from
Chitose in Hokkaido and Komatsu in Ishikawa Prefecture, the two
governments have been struggling to find a new site for fighter
training now conducted at Kadena Air Base.

"It is absurd for the US to have the right to air traffic control
over Japan's airspace," a government source said. There is no
sign of the US accommodating Japan's call for the joint military-
civilian use of Yokota Air Base and returning Yokota RAPCON.
Japan wants to establish a new council to finalize specific plans
in order to prevent the US from drawing a curtain on the issue.

The return of a base in Kanagawa Prefecture is also a sticky
issue. The government has asked for the return of Sagami Depot in
return for the establishment of the US Army 1st Corps
headquarters at Camp Zama. But the US has balked at Japan's
proposal. The US is scheduled to deploy in 2008 a nuclear-powered
aircraft carrier at its Yokosuka Naval Base, the first time for
this to happen in Japan. Japan's failure to have Sagami Depot
returned might draw a strong backlash from the local governments
that will be forced to shoulder a greater burden.

5) Strong possibility of final USFJ realignment agreement without
Okinawa on board since government unable to bridge gulf

MAINICHI (Page 2) (Full)
March 5, 2006

Defense Facilities Administration Agency Director General Iwao
Kitahara on Marcy 4 met in succession in Okinawa Prefecture with
Governor Keiichi Inamine and Nago City Mayor Yoshikazu
Shimabukuro in order to try to repair relations between the
central government and Okinawa's local government strained by a
feud over the relocation of the US forces' Futenma Air Station to
the coastal portion of Camp Schwab (in Nago City). However, he
was completely unsuccessful in bridging the gap between the two
sides. Although the talks between Japan and the US on completion
of a final report on the realignment of US forces in Japan by
late March are reaching the home stretch, there is a strong
possibility that the government-to-government agreement will be
sealed without acquiring the concurrence of the "main actor"
Okinawa.

Immediately after Director General Kitahara uttered words of
congratulations to Mayor Shimabukuro for his election, the mayor
beat him to the punch by directly stating, "I won't listen to any
talk about the coastal plan." After that, the mayor hardly
uttered a word, and Kitahara, unable to broach the main theme,
briefed him on the measures planned to reduce the burden on
Okinawa, such as the reduction of US Marines. The meeting ended
in only 15 minutes with the atmosphere just as awkward as it
started.

The government until now has sought the understanding for the
relocation of Futenma to Camp Schwab's coastal area by insisting,

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"It is a proposal with a high probability of being implemented,
and it also takes into the consideration the environment." In
response, the prefecture touted the appropriateness of the first
plan of 1999 to build a facility off the shoreline of Henoko in
Nago City. Nago City insisted that if the facility was going to
be moved closer to the coastal portion of Camp Schwab, the plan
would need major revision, so there ended up a three way split in
views.

It is true that though Gov. Inamine has given a certain amount of
praise to the specific measures to reduce the burden on Okinawa,
such as the coordination to fully return the Naha Military Port
facility, which local communities have bee hoping for. The
government as these plans harden up, has been thinking of using
the burden reduction measures as leverage to promote
understanding toward the Camp Schwab coastal plan. But the
prefectural side has given no sign of slackening its attitude.

The Japanese and the US governments will carry out senior working
level meetings again in Hawaii, starting March 7, with talks
heading into the last stretch on plans to consolidate and reduce
bases in southern potion of the main island of Okinawa. However,
the US side sees the USFJ realignment as a package deal, and
consider the realization of the Futenma relocation plan as a
condition a condition for other measures to reduce the burden
placed on Okinawa, such as moving the US Marines to Guam. If the
final report is signed without having obtained the concurrence of
local governments, it could become an agreement filled with the
possibility of other burden reduction measures being withdrawn,
as well.

6) US Embassy security division director would tolerate revision
of Futenma relocation proposal to location toward the ocean,
indicating flexible response to local wishes

SANKEI (Page 1) (Full)
March 5, 2006

Director of the Security Division Kevin Maher in the US Embassy
in Japan -- a main player in the Japan-US senior working-level
talks on the realignment of US forces in Japan -- gave an
interview to the Sankei Shimbun. In it, he expressed a view
tolerating a revision of the plan to relocate MCAS Futenma
(Ginowan City) to the coastal portion of Camp Schwab (Nago City)
that would reposition toward the ocean as the local community
desires. "If there is need for technical adjustments, we will
respond flexibly," he said.

The coastal plan, which was agreed to by Japan and the US last
October, would construct an alternate facility for Futenma Air
Station in a form that straddled the land and sea portions of
Camp Schwab. However, in that case, since the flight route would
pass over the roofs of neighboring homes, both Nago City and
Okinawa Prefecture have remained opposed to the plan. Diet
members who represent Okinawa, too, share the same view as Nago
City and have asked the government to shift the construction site
to a spot slightly off shore.

Maher pointed out that the coastal plan "may need technical
adjustments if it is to be carried out as agreed in the basic
plan." In addition, he stated, "We will respond flexibly to
adjustments in the details." Although he did not refer to any

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specific revision in contents, he indicated, "It would be
impossible without assuring the local community that we have
given consideration to their safety and the noise problem."

He apparently was indicating a stance of responding to a revision
that would shift the relocation spot toward the ocean off Camp
Schwab.

The US government in negotiating the relocation of Futenma Air
Station once proposed a plan for the shallow waters off Camp
Schwab. The Japanese side, including the Foreign Ministry, was
then positive about revising the plan in the direction of the
ocean, but the Defense Agency (JDA),which took the lead with the
current plan, would not budge. As one JDA officials stated, "Once
the plan was revised, we would not be able to keep up with
requests for revisions from other local governments."

But now with the US government taking a tolerant stance, it seems
likely that pressure will mount on JDA to revise its position.

7) Okinawa rally to oppose Futenma heliport relocation brings
together 35,000 participants

TOKYO SHIMBUN (Page 2) (Full)
March 6, 2006

In the planned realignment of US forces in Japan, Tokyo and
Washington have agreed to relocate Futenma Air Station to the
coastal part of the US Marine Corps' Camp Schwab. A rally to
oppose this coastal plan was held yesterday at Kaihin Park in
Ginowan City, bringing together approximately 35,000 citizens,
according to organizers. Participants criticized the government
for having bypassed the people of Okinawa in agreeing to the
coastal plan. They resolved to have the will of the people of
Okinawa reflected in a final report on the USFJ realignment to be
mapped out before the end of March.

The rally was the largest one ever regarding USFJ realignment. It
is the second largest ever, following the 1995 rally to protest
to the rape of an elementary school girl by three US service
members, which was attended by 85,000 people.

The organizer of the rally was the Implementation Committee
consisting of the Social Democratic Party, Okinawa Social Mass
Party, Japanese Communist Party, Democratic Party of Japan (DPJ =
Minshuto),trade unions, and citizen groups. Though the Liberal
Democratic Party and the New Komeito are against the coastal
plan, they did not take part in the rally fearing that their
participation would worsen their relations with the government.
Neither Okinawa Governor Keiichi Inamine nor Nago Mayor Yoshikazu
Shimabukuro took part.

Tokunobu Yamauchi, leader of the organizing group and former
chief cashier of the prefectural government, noted in a speech:
"The position of the people of Okinawa is that they do not accept
the coastal plan. Democracy means listening to that. . . . Let's
work to protect the future of Okinawa by opposing this agreement
that was reached without regard to local residents."

A housewife participant from Sedake, Nago City, close to the
relocation site, spoke from the stage, "I just want to protect a
quiet and tranquil life and hand down a wonderful natural

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environment to children."

The rally also resolved to oppose special legislation designed to
enable the recovery of land from the sea in the relocation site
without the authorization of the governor, something the
government is reportedly looking into.

8) Kadena mayor reacts negatively to joint use of Kadena Air Base
with ASDF

ASAHI (Page 38) (Full)
March 6, 2006

Defense Facilities Administration Agency Director General Iwao
Kitahara held talks with Mayor Tokujitsu Miyagi of Kadena hosting
US Kadena Air Base at the town hall yesterday. In the talks,
Miyagi expressed his unwillingness to accept Tokyo and
Washington's plan for allowing the Air Self-Defense Force to
jointly use Kadena Air Base as part of US force realignment. The
mayor said, "In view of Okinawa's history (that a large number of
local residents were killed by the Imperial Japanese Army during
the Battle of Okinawa),there is a strong allergic reaction to
the Self-Defense Forces. So we cannot accept the plan."

The partial relocation of F-15 fighter training from Kadena Air
Base to mainland Japan is specified in the Japan-US interim
report produced last October. The joint use of Kadena Air Base
with the SDF is expected to result in a greater burden on local
residents. Kitahara sought Miyagi's understanding, saying, "I
will assure you that the government will take proper steps to
reduce the burden (in the end)."

9) US: Difficult to return (RAPCON of) Yokota Air Base

NIHON KEIZAI (Page 2) (Full)
March 4, 2006

It was learned on March 3 from a written government reply on the
question of the possible return of air traffic control rights by
the US Air Force's Yokota Air Base, the US has answered, "It
would be difficult for operational reasons." But the government
reply states that Japan "would continue to make further efforts"
to seek its return. On the reversion of Yokota Air Base itself,
the statement read: "The base plays an important role from the
perspective of the Japan-US Security Treaty. There is no current
thinking about seeking its reversion." The replies were to
questions by Upper House lawmaker Shizuo Oyakata.

10) Japan to propose setting up consultative body for specific
steps to return Yokota base air traffic control

NIHON KEIZAI (Page 1) (Full)
March 6, 2006

Japan and the United States will resume intergovernmental working-
level consultations tomorrow in Hawaii over the realignment of US
forces in Japan, with their senior officials for foreign affairs
and defense attending. The Japanese government will then propose
setting up a new consultative committee for the overall reversion
of air traffic control from the US military's Yokota base in
Tokyo. Meanwhile, the Japanese and US governments are expected to
release a final report on the US military realignment in March at

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the earliest. The Japanese government will specify a course of
action in the final report for US Forces Japan (USFJ) to return
the Yokota airbase's air traffic control to Japan. As the next
step, Japan wants to hammer out specific procedures in the
proposed consultative committee. At present, most civilian
aircraft avoid the Yokota base's airspace. The Japanese
government wants to improve the efficiency of flight routes for
commercial airlines.

The consultative committee consists of senior officials from the
Japanese and US governments. The Japanese government wants to
accelerate discussions, envisioning the overall return of air
traffic control by 2009, when Haneda Airprot's offshore extension
will be completed.

In October last year, the Japanese and US governments released an
interim report incorporating an agreement to explore steps to
facilitate civilian aircraft flights through Yokota airspace.
However, the United States has said that it would be difficult to
return air traffic control for operational reasons. As it stands,
it will be difficult for the two governments to reach an
agreement at an early date. The Japanese government would like to
pave the way in the new panel to joint military-civilian use or
overall reversion in the future.

The Yokota base's airspace is hexagon-shaped and extends to an
altitude of 7,000 meters, stretching over Tokyo and eight other
prefectures from the Izu Peninsula in Shizuoka Prefecture to
Niigata Prefecture. Commercial airliners are allowed to fly
through the airspace if they have permission in advance from the
US military. Actually, however, most civilian airplanes avoid the
Yokota airspace. Narrow air corridors are crowded with civilian
aircraft, causing near misses.

Among regular flights, air routes between Haneda and northern
Kyushu are most affected. If the Yokota airspace is returned to
Japan, it will be possible to double-track their flights in that
airspace. "The flight time will be about five minutes shorter,
and commercial airlines can save tens of billions of yen a year
in fuel costs," an official says.

After Haneda Airport's offshore extension work, the total number
of flights to and from Haneda-including those to and from Narita
Airport-will increase from 470 at present to 650. The government
has therefore been tasked with Yokota airspace utilization.

SCHIEFFER