DAILY SUMMARY OF JAPANESE PRESS 03/13/06

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SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 03/13/06

INDEX:

(1) Iwakuni plebiscite: Vast majority says "no" to relocation
plan; Results regrettable to proponents

(2) 2,600 residents take part in rally near Camp Zama to call for
solidarity

(3) Government alarmed by a possible spillover of Iwakuni
rejection; Blow to government just before creating a final report
on the realignment of US forces in Japan

(4) Atsugi base neighbors confused over Iwakuni poll

(5) Transfer of US Marine Corps in Okinawa to Guam in USFJ
realignment; Japan proposes shouldering cost of building houses,
using loan system

(6) Editorial: Plebiscite in Iwakuni City - Realignment of US
forces in Japan nonetheless necessary

(7) SDF-USFJ fusion and its fate-Ahead of final report on USFJ
realignment (Part 3): Rear-echelon support; SDF routinizes
shipping, security for US forces

(8) China's proposal includes area on Japanese side of median
boundary and in Japan-South Korea joint development zone, besides
area near Senkakus

(9) Exchange of recriminations intensifying between Japan, China
over Yasukuni, gas field development

(10) Submission of administrative reform bill to Diet; Battle
between government and bureaucracy over specific items expected;
Focus on basic policy guidelines on economic and fiscal
management and structural reforms to be formulated in June

ARTICLES:

(1) Iwakuni plebiscite: Vast majority says "no" to relocation
plan; Results regrettable to proponents

MAINICHI (Page 30) (Abridged slightly)
March 13, 2006

Citizens' desire not to increase the aircraft noise level came
through in the plebiscite held yesterday in Iwakuni City,
Yamaguchi Prefecture. In the referendum, the vast majority
expressed opposition to the government's plan to relocate US
carrier-borne aircraft to the US base in the city. Encouraged by
the results, opponents of the relocation plan have begun vocally
urging the government to rescind the plan, while those tolerant
of the plan are calling for attaching conditions to it. Harboring
strong distrust in the central government's approach of making
decisions without prior consultations with affected local areas,
Iwakuni has sent a clear and loud message to Tokyo.

The votes were counted at the Iwakuni City Gymnasium last night,
and some 60 members of a major anti-relocation group watching the
process were overjoyed as it became clear that the vast majority
had voted against the relocation plan.

An emotionally charged Kiyoshi Okawa, 47, a co-representative of

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a group to make the plebiscite a success, said, "I'm so glad, and
I'm proud to be an Iwakuni citizen." He learned that the votes
would be counted, as turnout had exceeded the 50% line around
4:00 p.m. yesterday at the group's office near the Kintai Bridge.
Subsequently, about 25 citizens, including the group's members,
assembled in the city gymnasium.

Okawa said feverishly, "The government should stop gauging
America's feelings, and that is public opinion."

Also rushing to the gymnasium were Kaoru Kawamoto, 53, who heads
a citizens' group opposing the relocation of carrier-based
aircraft and night landing practice to the Iwakuni base, and some
10 members of the group. Members applauded Kawamoto, who said, "I
want to see our mayor convey the residents' loud voice to the
central government." Meanwhile, Yoshimichi Hirose, 82, who heads
a group opposed to the referendum, noted bitterly: "The results
are regrettable for the future of Iwakuni. I expect Mayor Ihara
to negotiate with the central government of his own volition in a
responsible manner."

(2) 2,600 residents take part in rally near Camp Zama to call for
solidarity

MAINICHI (Page 30) (Full)
March 13, 2006

The outcome of yesterday's Iwakuni plebiscite has drawn a mixed
reaction from municipal governments in the vicinity of the US
Atsugi base in Kanagawa Prefecture, which have been suffering
from noise pollution from carrier-borne aircraft. A rally was
also held yesterday near Camp Zama, which straddles Zama and
Sagamihara cities, drawing some 2,600 residents, mostly opponents
of the planned US force realignment. Participants chanted, "We
will block the relocation plan in cooperation (with Iwakuni)!"

Many mayors of municipalities near Atsugi urged the central
government to present possible solutions for the relocation
issue, noting that they are not in a position to comment on the
Iwakuni plebiscite. Yamato Mayor Kimiyasu Tsuchiya said matter-of-
factly, "Such an outcome was expected." Mayor Masaru Uchino of
Ebina commented, "I expect the central government to implement
good solutions that can win the understanding of affected local
governments in a responsible fashion."

Heads of six municipalities near US Yokota Air Base in Tokyo
abstained from commenting on the Iwakuni referendum. Fussa Mayor
Hisato Nozawa simply said, "The matter concerns only Iwakuni."

(3) Government alarmed by a possible spillover of Iwakuni
rejection; Blow to government just before creating a final report
on the realignment of US forces in Japan

MAINICHI (Page 3) (Full)
March 13, 2006

By Yoso Furumoto

A majority of residents in Iwakuni City, Yamaguchi Prefecture,
voted against the planned relocation of (carrier-based aircraft
to the US Marine Corps' Iwakuni Air Station). This outcome has
been a heavy blow to the central government, which had wanted to
launch full consultations with locals as the end-of-the-March

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deadline for a final report of the realignment is approaching.
The government is poised to push the relocation of carrier-borne
aircraft to the Iwakuni base, but its efforts to obtain local
consent are sure to run into difficulties. Also, the government
is increasingly alarmed by a possible spillover of public
objection to the realignment to other municipalities across the
nation.

In an effort to reduce the base-hosting municipalities' burden,
the government has given priority to relocating carrier-borne
aircraft based at Atsugi to other facilities. Despite the outcome
of the nonbinding plebiscite, in which a majority voted against
the relocation, the government has no intention of changing the
plan.

The government intends to remain in close contact with the
prefectural government, which is flexible about accepting the
relocation, as well as local economic and other circles that are
looking to the economic aspects of the base and continue efforts
to seek the understanding of Iwakuni City. The government may be
forced to present a new set of measures, such as a regional
economic stimulus package.

In the talks with the United States, the initial plan for KC-130
air tankers was to relocate them from the US Futenma airfield in
Okinawa Prefecture to the Maritime Self-Defense Force's (MSDF)
Kanoya base in Kagoshima Prefecture. But the US has now called
for a change to the initial plan to relocate them from Futenma to
the Iwakuni base. But no conclusion has been reached yet. This
change is likely to have a subtle effect on the ongoing talks
with the US, for it would bring about a new burden to Iwakuni.

What the government is now concerned about most in regard to the
result of the referendum is a possible spillover to Okinawa
Prefecture, which has strongly objected to the relocation of the
Futenma airfield to the coastal area of Camp Schwab. If this
relocation becomes impossible with the anti-relocation campaign
gaining momentum, the transfer of the US Marines' headquarters
from Okinawa to Guam and a reduction of up to 8,000 Marines could
be called off, given the US assertion that the realignment of
bases will be done in a package.

JDA Director-General Nukaga: Strive to obtain understanding and
cooperation

JDA Director-General Fukushiro Nukaga released the following
comment late yesterday:

"The relocation of carrier-borne aircraft to the Iwakuni base
must be realized in terms of maintaining Japan's security and
deterrent force, as well as reducing local burdens. I will do my
utmost to obtain local understanding and cooperation."

LDP Upper House Caucus Secretary General Katayama: "The
government is responsible for national security. The referendum
is nothing more than regional egoism."

The Liberal Democratic Party's Upper House Caucus Secretary
General Toranosuke Katayama yesterday criticized Iwakuni Mayor
Katsusuke Ihara, who had proposed holding the plebiscite, saying:
"It's improper to put things the government is responsible for
like security and defense to a referendum. Doing so is a kind of
regional egoism."

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Comments by experts: "Consideration is necessary" and "Impact is
limited"

By Kazuhiro Tahara and Norie Ueno

We interviewed experts about Iwakuni City's objections to the
planned relocation as seen in the referendum.

Osamu Watanabe, a professor of political science at Hitotsubashi
University who is well versed on security issues, said: "The
realignment talks are going on without consultations with local
municipalities. This sort of problem has come to the fore."
Hiroshi Honma, a professor of international law at Hosei
University, also criticized the government's stance of blindly
following the US, noting: "The central government needs to
reflect local voices in negotiations with the US."

On the other hand, Toshiya Hoshino, a professor of international
politics at Osaka University said: "It has meaning in that it is
an opinion poll about the bases, but there will be no change to
the current trend of following the interim report." Takashi
Kawakami, a professor of security issues at Takushoku University
who is well versed in security affairs, analyzed: "The direct
impact will be local, such as the mayoral election."

(4) Atsugi base neighbors confused over Iwakuni poll

ASAHI (Page 38) (Full)
March 13, 2006

The city of Iwakuni in Yamaguchi Prefecture has now rejected the
planned redeployment of US carrier-borne fighter jets to the US
Marine Corps' Iwakuni base in the prefecture from the US Navy's
Atsugi base in Kanagawa Prefecture over the realignment of US
forces in Japan as a result of yesterday's plebiscite. One of the
Atsugi base's hosts, the city of Yamato in Kanagawa Prefecture,
has regarded the redeployment plan as a "rare opportunity,"
according to a senior official of the city's municipal
government. Another senior official, however, voiced concern
about Iwakuni's rejection of the redeployment plan, saying the
redeployment plan has now become uncertain.

Meanwhile, local communities around Atsugi have been suffering
from aircraft noise and have been feeling uneasy about the risk
of aircraft crashes. Their residents also appeared perplexed
about the outcome of the referendum. "It's only natural that
Iwakuni citizens want to live under the safe, quiet sky," said
Motomu Maya, 79, one of those who have filed a class action
lawsuit against Atsugi base noise. "I can understand their
desire, and that's all I can say," he added.

(5) Transfer of US Marine Corps in Okinawa to Guam in USFJ
realignment; Japan proposes shouldering cost of building houses,
using loan system

YOMIURI (Page 2) (Full)
March 13, 2006

Japan-US working-level talks by foreign and defense officials
were held in Hawaii on Mar. 11. The meeting discussed the
realignment of US forces in Japan. The Japanese side conveyed to
the US side its readiness to shoulder the costs of transferring

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Marines stationed in Okinawa to Guam, including costs related to
the building of houses for US servicemen and their families,
using a loan system financed with private-sector funds. The
proposal is based on the idea of reducing Japan's burden by
having the US repay such costs so as to obtain the understanding
of the public. The US side did not object to the proposed loan
system, but it asked Japan to provide grant aid for the
consolidation of the base as a whole. The two countries agreed to
coordinate views on the issue.

The two countries will again hold a working-level meeting in
Tokyo on Mar. 20 or later with the aim of mapping out a final
report and releasing it by the end of the month.

The US during the working-level talks in February had submitted
an estimate that the cost of the transfer would be approximately
7.6 billion dollars (approximately 813.2 billion yen) and
presented the breakdown, which included approximately 4.7 billion
dollars for expenditures related to housing. The US later cut
back on some of spending items but added the cost of building
infrastructure. During the Hawaii talks, it came up with an
amount that greatly exceeded the previous 8 billion dollars
(approximately 856 billion yen).

Japan intends to have the private sector build housing and other
facilities, financed by the Japan Bank for International
Cooperation (JBIC),and receiving repayments from the US
government in the form of rent. This is the application of the US
public-private partnership, which is similar to Japan's private
finance initiative (PFI),applied to the construction of social
infrastructure using private-sector funds.

However, the problem with this system is it has to be determined
whether or not it is possible for the JBIC to finance the
construction of US military housing abroad under existing law. It
is necessary to enact a new law that provides a legal basis for
extending fiscal assistance for the construction of US military
facilities overseas, even if the assistance is rendered as grant
aid.

(6) Editorial: Plebiscite in Iwakuni City - Realignment of US
forces in Japan nonetheless necessary

YOMIURI (Page 3) (Full)
March 13, 2006

A majority of residents in Iwakuni City, Yamaguchi Prefecture,
voted against the planned relocation of carrier-based aircraft to
the city. The relocation is planned as part of the realignment of
US forces in Japan.

The voter turnout was 59%. Residents who voted against the
planned relocation overwhelmed those favoring it. The outcome
demonstrates strong public sentiment against an addition to the
base-related burden.

The result is not legally binding. But for the smooth
facilitation of the US military realignment, it is only natural
for government to make its best efforts to obtain local
understanding for the relocation.

Under the agreed plan between the Japanese and US governments, 57
carrier-based planes currently assigned to the US Naval Air

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Facility Atsugi in Kanagawa Prefecture and 1,600 US military
personnel will be transferred to the US Iwakuni Marine Corps Air
Station. The Maritime Self-Defense Force's (MSDF) 17 planes and
its 700 personnel currently based at Iwakuni will be moved to the
MSDF's Atsugi base.

The objectives of the US force realignment in Japan are to deal
with the changing security situation, as North Korea has revealed
its nuclear ambitions and China is on its way to becoming a
military superpower, as well as with international terrorism and
other new threats. The realignment is an extremely important
challenge for Japan in terms of strengthening its alliance with
the United States and beefing up its own security.

A number of problems had been pointed out regarding the
plebiscite.

Under Iwakuni City's ordinance, the referendum would be invalid
if voter turnout were less than 50%. Opponents of the planned
relocation appealed to residents to vote against the relocation,
while the pro-relocation group called on residents to stay away
from the poll. It is not a surprise to see that an overwhelming
majority voted against the relocation plan, given that such an
outcome was foreseen if voter turnout cleared the required
percentage.

Iwakuni Mayor Katsusuke Ihara, who thought it would be necessary
to show the central government the will of the local community,
suggested the plebiscite.

The city's ordinance, however, stipulates that items that do not
come under municipal authority are not put to a referendum. Some
residents also had complained that the planned relocation relates
to the central government's authority, so holding a referendum on
it is not in line with the city ordinance.

Iwakuni City will merge with seven neighboring towns and villages
on March 20 and in April a mayoral election for the new Iwakuni
City will take place. Some residents therefore criticized the
referendum as effectively being an election campaign. There are
some neighboring municipalities that have shown understanding
about the relocation. Questions were also raised about Iwakuni
City's move to hold a referendum on its own immediately before
the merger.

Considering all these things, Iwakuni City must not cause any
more confusion by unnecessarily bringing about a showdown with
the central government.

The important thing is for the central and local governments to
hold sincere consultations to protect national interests while
giving due consideration to the benefits of the residents.

A number of difficult negotiations with local residents still
remain to be finalized, including the relocation of the US
Marines' Futenma Air Station. A delay in the US realignment plan
due to Japan's domestic circumstances would only hurt the
bilateral relationship of trust. The government must do
everything it can in trying to meet the end-of-the-month target
for a final agreement with the US.

(7) SDF-USFJ fusion and its fate-Ahead of final report on USFJ
realignment (Part 3): Rear-echelon support; SDF routinizes

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shipping, security for US forces

ASAHI (Page 37) (Full)
March 5, 2006

In the northern part of Okinawa's main island is a military
training area for the US Marine Corps. The area is known as Red
Beach. A crowd of US servicemen is embarking on a white twin-
hulled vessel, which was once loaded with as many as 1,000
troops, armored vehicles, 155-mm howitzers, and choppers from
Futenma airfield.

The vessel's name is WestPac Express, and its maximum speed is
about 70 km/h, nearly twice as fast as an assault landing craft.
The WestPac Express is a high-speed transport for the US Marines.
Okinawa has been home to the WestPac Express since 2001. The
vessel shuttles to and from the Philippines, Thailand, Guam, and
other locations.

The United States will substantially scale back on its troop
deployment near the former Iron Curtain in Europe and near the
military boundary on the Korean Peninsula. Meanwhile, the United
States is also readying its troops for rapid deployment around
the world so that its military can promptly react to terrorism
and other unexpected attacks. Those seaborne troops therefore
need a high-speed transport.

Japan's Self-Defense Forces will also have a high-speed
transport. The Defense Agency had no plan to introduce such a
transport. However, the US military wants the SDF to have a high-
speed transport for US troops. The US government therefore asked
the Japanese government in their talks over the realignment of US
forces in Japan, and the two governments incorporated it in an
interim report on the US military realignment. For now, the
Maritime Self-Defense Force is expected to use the transport in
order to sealift Marines between Japan and Guam after they are
moved from Okinawa to Guam.

In March 2004, the Ground Self-Defense Force trained at its Naha
garrison for the security of US military bases. The GSDF worked
out plans for how to deploy its troops and vehicles and where to
set up a command post in order to guard Camp Zukeran (i.e., Camp
Foster),where the US Marines have their base headquarters.

The GSDF has been tasked with troop mobilization for its
additional role of securing US military bases and SDF facilities
since the Sept. 11, 2001, terrorist attacks in the United States.
In 2003, the GSDF began full-fledged training for such security
mobilization. So far, the GSDF has trained about 20 times for
that purpose.

The GSDF used to actually place troops at US military facilities
in its security mobilization training. In Okinawa, however, the
GSDF went no further than to conduct a command post exercise.
That is because the GSDF considered the island prefecture's
public sensitiveness to the US military presence there. "We don't
want people in Okinawa Prefecture to misunderstand that the SDF,
which should defend the people of Okinawa Prefecture, defends US
forces," said a GSDF officer garrisoned at the GSDF's Naha base.
Such a situation also could change if and when the US military
presence is actually realigned. That is because the interim
report incorporated a course of action for the SDF and US forces
to share US military bases in Okinawa. If the GSDF routinizes its

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stationing of troops at US military bases, it will be possible
for the GSDF to strengthen its warning setup for US forces in the
name of securing SDF facilities even without a security
mobilization order.

In those days, Yoshinori Ono, who was at the time director
general of the Defense Agency, gave instructions to the agency's
senior officials attending the realignment talks. In his
directives, Ono told them to propose reducing the footprint of US
forces in Japan in exchange for Japan's undertaking of base
security and other management operations at US military bases to
be shared with the SDF.

The SDF engages in shipping, supply, base security, and other
rear-echelon services, with the US military specializing in
striking power. This is the idea behind the US military
realignment.

Japan can expect to reduce the number of US troops in Japan and
to alleviate the burden of base-hosting localities while
maintaining deterrent capabilities against China and North Korea.
Meanwhile, the United States can swing its reduced troops around
the world with Japan's backing. The two countries' expectations
coincided.

The SDF is not allowed to take part in combat operations due to
constitutional constraints as long as Japan is not facing an
emergency. "All Japan can do for now is to fulfill its support in
the rear," says a senior official of the Defense Agency. Such a
view dominates the agency.

Even so, some of the GSDF's uniformed staff are reluctant about
such roles. One of them said, "Why do we have to subcontract
routine work like shipping and base security for US forces?" This
official added, "The SDF is not a part of US forces." Another
said, "The more our integration goes on, the more difficult it
will be for the Japanese government to differ from the United
States in its making of policy decisions."

How far should the SDF go in its fusion with the US military?
Where can it apply a brake? Japan and the United States are now
in the final phase of talks over the US military presence's
realignment to release a final report in late March.

This is the last of a three-part series, SDF-USFJ fusion and its
fate-Ahead of final report on USFJ realignment.

(8) China's proposal includes area on Japanese side of median
boundary and in Japan-South Korea joint development zone, besides
area near Senkakus

SANKEI (Top Play) (Slightly abridged)
March 11, 2006

In its proposal for joint development with Japan of gas fields in
the East China Sea, China cited two areas, both of which lie on
the Japanese side of the median boundary line set by Japan,
indicating that China has no intention of jointly exploring with
Japan gas fields situated on the Chinese side of the median line.

According to several government and diplomatic sources, in the
fourth round of Japan-China government-level talks held in
Beijing on March 6-7, a Chinese representative distributed to the

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participants copies of a marine chart on which black dots marked
their proposed sites for joint development. The chart did not
include the median line set by Japan.

The Chinese representative reportedly gave no detailed
information about the locations, such as latitude and longitude,
only saying: "We are ready to give a detailed explanation if you
are interested in our nation's proposal."

As a result of carefully examining the marked areas after the
talks, the Japanese delegation found that one area is on the
Japanese side of the median boundary and is within the Japan-
South Korea joint development area based on their accord. The
delegates also found that another area is located about 22.2
kilometers north of the Senkaku Islands and is within Japan's
exclusive economic zone (EEZ). However, Foreign Ministry Asian
and Oceanian Affairs Bureau Director General Kenichiro Sasae and
other Japanese representatives did not immediately report on the
Chinese proposal to the Prime Minister's Office. They also
requested that the areas proposed by China be kept closed.

On March 8, after returning to Japan, Sasae detailed the contents
of the talks separately to Prime Minister Junichiro Koizumi and
Chief Cabinet Secretary Shinzo Abe. Abe reportedly reprimanded
Sasae harshly, saying: "Joint development in the two areas set
forth in the proposal is out of the question. Why didn't you
refuse to accept it?"

A senior government official expressed displeasure with the
stance taken by Japanese negotiators, saying: "It is fully
conceivable that China would try to delay negotiations. Keeping
such a possibility in mind, Japan should have said, 'Japan will
start test-drilling on its own if China refuses to respond to
joint development.'"

The Liberal Democratic Party on March 10 approved a bill designed
to ensure the safe exploitation of natural resources within the
nation's EEZ. The LDP plans to submit the bill with the New
Komeito and the Democratic Party of Japan.

Under the bill, the Land, Infrastructure, and Transport Ministry
would designate an area 500 meters around a facility set up to
exploit, develop, or investigate natural resources within the
Japan-set EEZ median line as a restricted area. The government
has provided Teikoku Oil Co. with test-drilling rights in the
East China Sea, but there is no legal framework to protect oil
drilling and other equipment from being damaged.

(9) Exchange of recriminations intensifying between Japan, China
over Yasukuni, gas field development

TOKYO SHIMBUN (Page 2) (Full)
March 13, 2006

An exchange of recriminations is intensifying between the
Japanese and Chinese governments. There are a host of issues
pending between the two countries, such as Prime Minister
Junichiro Koizumi's visits to Yasukuni Shrine and the development
of gas fields in the East China Sea. Given the circumstances,
including speculation about Koizumi's successor, the situation
surrounding the two countries is getting worse and worse.

Chinese Foreign Minister Li Zhaoxing harshly criticized Koizumi's

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visits to the shrine, comparing them to worship of Hitler and the
Nazis. Some observers take the view that China is trying to apply
pressure to potential post-Koizumi candidates over the Yasukuni
issue by stressing its uncompromising stance.

Reacting sharply to Li's remarks, Foreign Ministry Administrative
Vice Minister Shotaro Yachi tried to call in Ambassador to Japan
Wang Yi to lodge a protest. But the ambassador suggested meeting
Yachi on the following day, saying that he was busy. Yachi gave a
negative response to Wang's proposal and talked with Wang by
phone. Japanese officials have also reacted fiercely to China's
response as "posing a problem in terms of diplomatic courtesy."

On the development of gas fields, China proposed a plan to
jointly develop an area near the Senkaku Islands that is
effectively under the control of Japan. Many Japanese government
officials have taken the proposal as provocative. Chief Cabinet
Secretary Shinzo Abe expressed displeasure, saying: "China should

SIPDIS
come up with a more realistic proposal."

In response, Beijing promptly launched a counterattack, with
Foreign Ministry Spokesman Qin Gang assailing: "If Japan, in an
attempt to divert our attention from the Yasukuni issue, tries to
make use of the gas field issue, the issue will never be
resolved." Given growing anti-Japanese sentiment in the nation,
Qin thus indicated that China would never make concessions.

A senior Foreign Ministry official commented on the strained
Japan-China relations: "China is becoming overly nervous. It
should make a response in a cool-headed manner."

Late this month, representatives from seven groups, including the
Japan-China Friendship Parliamentary Association, will visit
Beijing to meet senior Chinese government officials. China has
indicated plans to issue a document including measures to improve
bilateral ties. It is unlikely, though, that both sides will be
able to facilitate a thaw soon.

(10) Submission of administrative reform bill to Diet; Battle
between government and bureaucracy over specific items expected;
Focus on basic policy guidelines on economic and fiscal
management and structural reforms to be formulated in June

NIHON KEIZAI (Page 2) (Slightly abridged)
March 11, 2006

The government on Mar. 10 adopted an administrative reform
promotion bill at a cabinet meeting and submitted it to the Diet.
Since the bill is intended to prevent Prime Minister Junichiro
Koizumi's reform policy from being rolled back, the ruling camp
is geared up to do its utmost for its enactment at an early date.
At the same time, efforts to look into details of the proposed
reform items, which had been put on the back burner at the stage
of mapping out the bill, have also moved into high gear.
Concerned government agencies have already launched a drive to
water down the bill. With the inclusion of specifics of the
legislation in the basic policy guidelines on economic and fiscal
management and structural reforms to be compiled in June, the
battle against the bureaucracy will move into high gear.

Furious with reply

The administrative reform legislation includes five key items:

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(1) the integration and reorganization of eight government-
affiliated financial institutions; (2) a net reduction in the
fixed number of public employees by more than 5% over five years;
(3) heightened efficiency in 41 special accounts; (4) selling off
assets held by the central and local governments; and (5) a
review of the organizations and businesses of independent
administrative agencies.

The bill contains a reform policy, but specific measures to
realize proposed reform items will be incorporated in the basic
policy guidelines on economic and fiscal management and
structural reforms to be compiled in June. The Administrative
Reform Promotion Office, which directly reports to the prime
minister, is concerned that bureaucrats will try to water down
the bill at that stage. The main targets in the battle will
likely be a net reduction in the number of public servants and
reform of public financial institutions.

The expert council for downsizing and streamlining administrative
work, tasked with mapping out specific measures to cut back on
the number of public servants, met on Mar. 10. Participants from
the Ministry of Agriculture, Forestry, and Fisheries (MAFF)
turned down the panel's request to reduce the number of ministry
officials, upsetting panel members, including chairman Makoto
Iida, supreme advisor to Secom. He urged, "Drastic reform of
major services should be carried out from the general perspective
of reform." The panel asked MAFF to come up with a reply in
April.

However, MAFF was not the only government agency that came up
with a negative stance. The panel called for a net reduction in
the number of officials in eight areas, including the MOFA
Statistics Department; the Ministry of Land, Infrastructure, and
Transport's (MLIT) Hokkaido Bureau; and the Justice Ministry's
prison administration facilities. However, none of the
secretariats of the concerned ministries positively responded to

SIPDIS
the requests.

Some fear that the concerned ministry (Finance Ministry = MOF)
will use a special kind of technique in opposing the proposed
integration of government-affiliated financial institutions. The
readjustment plan, which MOF's secretariat presented at a meeting
of counselors of the Special Public Corporation Reform Promotion
Head Office, included points that can interpreted as intended to
water down the bill.

For instance, in response to a proposal for abolishing the Japan
Finance Corporation for Municipal Enterprises (JFCME),which is
responsible for providing government funds to local governments,
the readjustment plan proposed how best to secure the
government's fiscal health. If a settlement were reached in the
form of leaving the flow of government funds into the JFCME
intact even after its abolition, the reform would not lead to
fiscal reconstruction. It would be just a change in the name of
the recipient of the funds to a local organization.

Chairman Iida at a press conference expressed his determination
to bulldoze his way through, saying: "The ongoing reform efforts
are the greatest reform initiative in history. I expect fierce
opposition, but what must be done must be done." The real battle
against bureaucratic organizations is yet to come.

SCHIEFFER