DAILY SUMMARY OF JAPANESE PRESS 03/17/06

UNCLAS SECTION 01 OF 10 TOKYO 001444

SIPDIS

SIPDIS

DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA
WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST
DIVISION; TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS
OFFICE; SECDEF FOR JCS-J-5/JAPAN,
DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA
FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY
ADVISOR; CINCPAC FLT/PA/ COMNAVFORJAPAN/PA.

E.O. 12958: N/A
TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA
SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 03/17/06


INDEX:

(1) Editorial: US ambassador's inspection of abduction site -
international cooperation should be strengthen to give pressure
on North Korea

(2) Interview with Lawless: US may continue Futenma talks beyond
this month; 7.5-billion-dollar relocation cost reasonable

(3) DFAA to punish officials who approved extra survey work off
Nago worth 2 billion

(4) US agriculture minister: Pieces of bone mixed into beef
shipments "common" in world

(5) LDP trying to mend relations with the Association of Special
Postmasters with eye on elections after Prime Minister Koizumi
steps down

(6) China's diplomatic maneuvering toward Japan: Putting pressure
in political area but enhancing friendship with private sector,
aiming for practical gains in energy-saving and environmental
areas

(7) Review of small government argument: Eruption of
contradictions of market economy

ARTICLES:

(1) Editorial: US ambassador's inspection of abduction site -
international cooperation should be strengthen to give pressure
on North Korea

SANKEI (Page 2) (Full)
March 17, 2006

The visit by US Ambassador to Japan Thomas Schieffer to the site
in Niigata City where North Korean agents had abducted 13-year-
old Megumi Yokota is a strong expression by the United States
that abductions by North Korea can never be tolerated.

It was the ambassador's wish to inspect the abduction site. After
touring the school route and the beach where Megumi was abducted
with her parents as guides, Schieffer said:

"(The Yokotas' story) is the saddest I have ever heard. I think
anyone who has walked these streets as I have just done would be
touched. I was able to feel first hand that a dreadful incident
had happened here."

We hope that Ambassador Schieffer's feelings will lead to an
arousal of US public opinion through President George W. Bush,
the ambassador's old friend.

Megumi's mother, Sakie, and others will visit the United States
in late April to testify on the abduction issue before a hearing
of the House of Representatives. The liaison committee of the
families of the missing abductees also have appealed to the UN
Commission on Human Rights in Geneva. It will be the first time
for them to testify on the abduction issue before the US
Congress.

According to accounts by Charles Jenkins, the husband of Hitomi

TOKYO 00001444 002 OF 010


Soga, one of the repatriated abductees, North Korea has abducted
people from 12 countries. Since Jenkins reveals in his book that
Romanians were abducted in Italy, the Italian police will soon
dispatch investigators to Japan.

Lebanese women who managed to escaped from North Korea said that
a total of 28 foreigners, including three French women, two Dutch
women, and three Italian women, were going through agent
training. Japan should strengthen cooperation also with these
European countries by exchanging information.

At a House of Councillors Budget Committee session on March 15,
Chief Cabinet Secretary Shinzo Abe stated: "Japan needs to
express its determination to cherish even one person's life."
Foreign Minister Taro Aso expressed displeasure with the
increasing volume of trade between North Korean and China and
between North and South Korea. He stated: "It seems to me that
(the two countries) have helped the North. I cannot understand
why they do so."

Japan must continue tenaciously its diplomatic effort to urge
Beijing and Seoul to cooperate with Japan, the US and Europe to
resolve the abduction issue.

The government's special team on the abduction issue plans to set
up two sub-committees -- one on law-enforcement and the other on
information-collection -- in an effort to step up pressure on the
North. Ministries and agencies should strengthen cooperation and
give considerable thought to how to settle the abduction issue.

(2) Interview with Lawless: US may continue Futenma talks beyond
this month; 7.5-billion-dollar relocation cost reasonable

ASAHI (Page 4) (Full)
March 17, 2006

The following is a gist of US Deputy Assistant Secretary of
Defense Lawless' remarks in the Asahi Shimbun's interview on
March 15:

Present situation, problems:

There are three pending issues; 1) relocating Futenma airfield;
2) moving Okinawa Marines to Guam; and 3) returning and
realigning bases in Okinawa. We think it's possible to resolve
all the issues if we are appropriately willing to do so.

Regrettably, the problem is that their (Japanese) arguments will
be narrowed down at once to the small concerns of base-hosting
localities involved in relocation. We're concerned that many of
our Japanese counterparts cannot focus properly on the strategic
needs of our alliance.

It might not be easy for the Japanese government to complete the
process of local coordination as shown in our agreement
(incorporated in the interim report) of October last year. But
that's the Japanese government's responsibility.

Changes to Futenma relocation plan:

When we created the agreement in October last year, the Japanese
government had strong confidence it could obtain local
understanding. They said there was no problem. That's why we

TOKYO 00001444 003 OF 010


agreed. Of course, if the Japanese government asks us to show
flexibility, we will respond then. We're ready to positively
consider changes to the plan, if such changes do not sacrifice
our military capability already agreed to.

Time limit:

We don't necessarily have only 15 days left (until the end of
March). We will continue our consultations beyond the time limit,
if we need to do so. However, there's no option of taking another
5 or 10 years from now to resolve the problem.

Guam relocation

We plan to create an important hub in Guam consisting not only of
the Marines, but also combining the Air Force and the Army. The
relocation of the Marines from Okinawa is but one element in this
process.

The combined cost of relocating the Marines and building related
infrastructure is estimated to be approximately $10 billion. The
US will bear the cost of the entire redeployment, which will
greatly exceed that amount. In addition, since the Marines are
being transferred there at Japan's request, our asking Japan to
cover approximately 75% of that cost is highly appropriate.

US-Japan Security Consultative Committee (2 plus 2 meeting)

We have received a request from Japan to convene a 2 plus 2
meeting. We are preparing to consider it based on the need for
one. The US would like to make a judgment on that at the stage
when we will be able to reach a comprehensive agreement regarding
the entire realignment plan. For the US and Japan to try to reach
a final agreement before coordination at Japan's local level is
complete would not be an effective approach.

Comprehensive agreement

All aspects of the realignment plan are interrelated and
interdependent. We must complete a comprehensive agreement that
includes everything in the plan. If we make an agreement on only
a part of the plan and put off the rest, such as leaving the
Futenma relocation undecided, it would repeat the same mistake as
that in the SACO agreement.

Japan should regard as a priority matter accompanying the
realignment the consolidation and realignment of the Marines who
will remain in Okinawa, but in order to bring that process about,
the final agreement needs to contain the Futenma relocation and
the transfer to Guam of 8,000 Marines.

What the realignment promotes are basic changes that will bring a
higher level of confidence in the alliance, make it easier for
localities to accept it, and be useful for generations to come.
This will be the largest-scale revolution in the alliance since
the reversion of Okinawa to Japan. For the American forces, this
massive change rarely occurs even on a global scale. If we let
this opportunity slip away for the moment, it will not be
possible to carry it out.

(3) DFAA to punish officials who approved extra survey work off
Nago worth 2 billion


TOKYO 00001444 004 OF 010


TOKYO SHIMBUN (Page 1) (Full)
March 17, 2006

The Defense Facilities Administration Agency (DFAA) carried out a
geographic survey until last October in connection with the
construction of an offshore airport off the Henoko district in
Nago City, Okinawa Prefecture, as an alternative facility of the
Marine Corps Futenma Air Station. In connection with this
project, it was learned yesterday that although the contracts
with three companies for the work totaled 840 million yen, the
amount actually billed was approximately 2.8 billion yen. The
DFAA has decided not to pay the overcharge of about 2 billion
yen. The agency has started investigating officials at the Naha
bureau suspected of having given unauthorized approval for the
extra work.

The three contractors are OYO Corporation, Pacific Consultants
Co., and SUNCOH, all based in Tokyo. They were awarded contracts
worth 840 million yen from the Naha Defense Facilities
Administration Bureau (DFAB).

Soon after starting the survey work, the companies faced protest
sit-ins by residents who mounted the platform constructed for the
purpose of doing the site survey. In part also because of the
effects of typhoons, the work did not make headway as intended.
In talks last October, Japan and the US decided to switch the
construction site from waters near Henoko to an area on the
coastline of Henoko. Following this, the survey was suspended.

The DFAA notified the three contractors yesterday of the
cancellation of the contracts. The agency will make payments by
the end of this month based on the contracts.

According to an informed source, the three firms have demanded a
total of 2.8 billion yen, with the explanation that expenses
piled up because of such services as taking their staff to an
from the work site by boat everyday. The person said that one
contractor is calling on the DFAA to pay the full amount, citing,
"we continued to put workboats out to sea upon getting
confirmation from DFAA officials," and "There were verbal
requests."

Senior officials of the Naha DFAA Construction Department are now
suspected of having contacted the DFAA Construction Department
and having given approval for continued work that was not
included in the contracts.

A senior DFAA official emphasized there was no need for the
agency to pay the extra charges, saying: "We cannot pay for work
that is not included in the contract documents. I wonder why they
did not propose concluding a new contract before adding the extra
work."

A spokesman of OYO Corporation said: "I cannot make a comment." A
Pacific Consultants spokesman said: "All the facts of the case
have yet to be brought to light."

(4) US agriculture minister: Pieces of bone mixed into beef
shipments "common" in world

YOMIURI (Page 2) (Full)
Evening, March 17, 2006


TOKYO 00001444 005 OF 010


Eiji Hirose, Washington

Referring to the recent discovery of bones prohibited under a
bilateral accord due to BSE risk included in a US beef shipment
to Hong Kong, US Secretary of Agriculture Mike Johanns stated in
a press conference in Washington on March 16: "It is common at
any meat-processing plants across the world that pieces of bone
are mixed into meat in the slaughtering process." He added: "The
plant that shipped beef containing a banned part believes that
the chips of bones included in the shipment was within
tolerances." Asked about whether the case will affect Japan-US
negotiations on Japan's resumption of US beef import, Johanns
emphatically said: "I do not think the issue will affect the
negotiations."

In Japan, however, distrust is increasing in the United State's
sloppy inspection system and procedures. The agriculture
secretary's remark, under such a situation, defining the volume

SIPDIS
of mixed bones as being within a tolerable range is likely to
have some effect on the Japan-US beef talks.

The plant that shipped beef containing banned bones to Hong Kong
- owned by Swift Beef Co - had cleared a Japanese government
inspection last December to certify beef shipments to Japan. The
inspection concluded that the process of removing specified risk
materials there had been "properly carried out."

(5) LDP trying to mend relations with the Association of Special
Postmasters with eye on elections after Prime Minister Koizumi
steps down

YOMIURI (Page 4) (Excerpts)
March 16, 2006

The Liberal Democratic Party's (LDP) Party Organization
Headquarters Chairman Yoshio Yatsu, a former agriculture
minister, called on Prime Minister Junichiro Koizumi at his
office (Kantei) on Feb. 23, six months after the latest House of
Representatives election. Yatsu told Koizumi, "I have something
to tell you."

Yatsu told the prime minister about the political maneuvering
going on in seeking reconciliation with the Association of
Special Postmasters. The relationship between the LDP and the
association has deteriorated due to Koizumi's postal-
privatization program. Koizumi branded the organization, which
has been a strong support group for LDP, as "a force of
resistance" since the group stubbornly opposed the privatization
bills.

Yachi said to Koizumi:

"Our party needs the organization's support for next summer's
House of Councillors elections. The organization's officials came
to our party headquarters the other day, following my visit to
them. We talked about various matters over dinner."

Koizumi grinned widely and told Yatsu, "That's good. Mr. Yatsu, I
will rely on you." He gave Yatsu the go-ahead to repair the
deteriorated ties with the postal organization.

A senior LDP lawmaker presumed Koizumi's mind this way:


TOKYO 00001444 006 OF 010


"The prime minister probably arrived at a conclusion that it
would be better for the party to secure cooperation from special
postmasters in order to get the postal-privatization process,
which will start in October 2007, underway; and that since postal
privatization has already been decided, he no longer needs to
attack them."

The LDP engaged in a deadly power struggle in last year's Lower
House election. Koizumi fielded candidates against all anti-
postal-privatization candidates. The postal association, which
supported the anti-privatization candidates, suffered a complete
defeat.

The association summed up its relations with the LDP in its
general meeting on Nov. 6 after the postal-privatization
legislation cleared the Diet that it was unable to continue the
relationship with the LDP. It did not invite any LDP Diet members
to its regional general meetings held in February across the
nation.

Taiju, a political organization composed of retired special
postmasters and their family members, also cut its ties with the
LDP. Since 95% of the Taiju members did not pay party membership
fees, the number of LDP members decreased to a mere 6,157 from
the previous year's 114,905.

The organization, however, is unable to work out strategies
without the LDP's support. As if to see through the
organization's weakness, LDP Upper House Caucus Secretary General
Toranosuke Katayama sought to check the organization, saying:

"I understand that the association cannot change its policy
immediately. When it considers postal business and post offices
in the future, it will receive no benefits if it makes an enemy
of the LDP."

Some LDP lawmakers have started to make efforts to restore ties
with special postmasters.

In the 1980 Upper House election, an LDP candidate, who was a
postal bureaucrat, obtained 1.03 million votes of the postal
association and Taiju. The number of votes obtained by LDP
candidates decreased to about 480,000 votes in the 2001 Upper
House election, and to 280,000 votes in 2004 Upper House
election.

The LDP needs such organizations as the postal association and
Taiju, which work for the party without pay.

Local assembly members also will need their support for the
unified elections to be held in April next year.

Given the circumstances, the LDP is now trying to mend its ties
with the association with the unified elections, the Upper House
election, and even the next Lower House election in mind.

(6) China's diplomatic maneuvering toward Japan: Putting pressure
in political area but enhancing friendship with private sector,
aiming for practical gains in energy-saving and environmental
areas

SANKEI (Page 2) (Full)
March 16, 2006

TOKYO 00001444 007 OF 010



By Tadashi Ito, Beijing

Putting aside the hope for repairing the currently chilly
relations with Japan on the political front, China appears to
have decided to strengthen its approaches to the Japanese private
sector. As part of this, China has invited leaders of seven pro-
China organizations of Japan to visit China. They are scheduled
to travel to China late this month. According to a source
familiar with Japan-China relations, President Hu Jintao will
meet them and emphasize the importance of Japan-China ties and
the need for expansion of exchanges especially in economic and
trade sectors.

China has concluded that the current strains between Japan and
China have been brought about mostly by Prime Minister Junichiro
Koizumi's continued visits to Yasukuni Shrine. But according to
the source, China has analyzed from the words and deeds of Chief
Cabinet Secretary Shinzo Abe and Foreign Minister Taro Aso that
the Yasukuni issue is likely to remain an open question after
Koizumi steps down.

China cannot yield on the Yasukuni issue that has become an
international issue in that country. On March 7, Foreign Minister
Li Zhaoxing during a press conference blasted at Koizumi for his
shrine visits. On March 14, Premier Wen Jiabao made a direct
reference to the Yasukuni issue unlike a press conference a year
ago and stated that as long as the shrine visit continues,
mending ties (with Japan) would not realize.

There is a noticeable change in Wen's statements between this
year and last year, the source said. At his press conference last
year, Wen mentioned three principles for mending fences with
Japan: 1) looking toward the future in learning lessons from
history; 2) firmly maintaining the one-China principle; and 3)
jointly progressing with increased cooperation. This year, Wen
pointed out: 1) continuing strategic dialogue; 2) strengthening
private-sector exchanges; and expanding economic and trade ties.

Of these three, private-sector exchanges are worth noting as Wen
explained that they "will facilitate mutual understanding and
trust." The premier mentioned difficulties in repairing
relations, but added, "The cause does not lie with the Japanese
public," pointing a finger at the leader of Japan.

According to the source, after much discussion since late last
year until recently of Japan policy with temporarily recalled
Ambassador to Japan Wang Yi, the Chinese government adopted the
policy line of enlivening private-sector exchanges as well as
enhancing measures for public opinion, including Japanese mass
media.

The first action in line with promotion of private-sector
exchanges came in the way for the China-Japan Friendship
Association to invite leaders of seven Japan-China friendship
organizations in Japan to visit China. Reportedly, these leaders
have been informally told that they would meet with President Hu
Jintao.

Leaders of those seven groups include former Prime Minister
Ryutaro Hashimoto (chair of the Association for the Promotion of
International Trade, Japan or JAPIT),former Foreign Minister
Masahiko Komura (chair of the Japan-China Friendship

TOKYO 00001444 008 OF 010


Parliamentary League and former Home Affairs Minister Takeshi
Noda (chair of the Japan-China Association). They will arrive in
Beijing by March 30 and are expected to meet with President Hu
possibly on March 31. Hu as well as Wen is likely to insist on
the importance of facilitation of private-sector exchanges.

Before normalizing diplomatic ties with Japan, China adopted a
similar approach of promoting private-sector exchanges but
pressuring the government. The source explained that Japan's
cooperation would be indispensable for China in achieving the
targets mentioned in the new five-year plan that covers the
period from 2006 through 2010, adopted at the recent National
People's Congress meeting, for instance, to attain the goals in
the areas of saving-energy and environmental preservation.

According to the source, Japan Business Federation (Nippon
Keidanren) Chairman Hiroshi Okuda met with President Hu and
Premier Wen last September and referring to development of the
western part of China, Okuda proposed cooperation between the
government and private sectors in the environmental area. His
proposal received high praises from China. With the facilitation
of private-sector exchanges, China appears to aim to put pressure
on Japan politically but at the same time to gain practical
benefits.

(7) Review of small government argument: Eruption of
contradictions of market economy

YOMIURI (Page 13) (Full)
March 15, 2006

By Takamitsu Sawa, professor at Kyoto University

Egalitarian society

There is nothing wrong about the structural reform of the Koizumi
Cabinet aiming for a small government. However, when it comes to
the question of whether everything will be all right if it is
left to the private sector to work out, I am afraid that such is
not the case. It is necessary to reset a demarcation line between
what the government should do and what it should not do.

In the 1958-1973 high growth period, even when fiscal outlays
expanded, revenues and expenditures were in balance, because tax
revenues made up for the expanded spending. However, since the
oil crises (of the 1970s),the growth of the Japanese economy has
slowed, but spending has kept growing, putting public finances
into the red. Since the Heisei period (1990s) recession kicked
in, the economy stopped growing or even moved into the negative
territory, necessitating the elimination of wasteful government
spending. The Koizumi cabinet was inaugurated in 2001 with such
slogans as "small government" and "structural reforms." Such were
relevant policy goals.

However, Prime Minister Koizumi was a Margaret Thatcher (former
British prime minister) who was 20 years too late. Under
Thatcherism, many state-run companies were privatized in Britain.
Deregulatory efforts were made unflinchingly. As a result,
Britain conquered the so-called British disease and overcome its
sluggish economy, but this policy has led to widened income
disparity and the deterioration of public education and medical
services.


TOKYO 00001444 009 OF 010


After the collapse of international socialism, the idea of having
a pure market economy became a utopian concept sought during the
1980s and 1990s. There was an assumption at the time that
creation of a free competition society characterized by market-
based principles would benefit the poor, as well. This
assumption, however, turned out to be mistaken. The pursuit of
such a society has made the rich even richer and the poor even
poorer. Problems with excessive Thatcherism are beginning to
erupt in Japan, too.

The 1990s in Japan was called the "lost decade." The nation lost
much in this decade. The hardest blow was dealt to traditional
virtues, such as diligence, perseverence, serious-mindedness and
sincerity, which were all rejected.

When the bubble economy was at its peak, stories of people making
profits of tens of millions of yen just by buying and selling
land on the phone, were talked about in an affirmative manner.
Takafumi Horie, former president of Livedoor, was in his late
'teens in the bubble economy period. He saw many of Japan's
traditional virtues cast aside. In my view, the Livedoor incident
has ushered in the final act of the negative legacy of the bubble
economy. Since the Livedoor scandal, the press has begun to make
an issue of the social divide and other negative aspects that
accompany a free market economy.

After the war, Japan rushed to rebuild its economy to become an
industrialized society, culminating around 1990. Now it has
reached the threshold of becoming a post-industrial society. In a
post-industrial society, the manufacturing sector would
restructure its management by introducing information and
technology (IT),and the services sector, such as financial
services, telecommunications and information services, would be
where the key industries lie. The US maintained prosperity in the
1990s, free from a recession, because it was the first to achieve
a post-industrial society. In order for Japan to turn around its
economy fully and maintain an annual growth rate at around 3%, it
will have to follow the same path as the US did.

However, a post-industrial society is not necessarily a good
society. We see in the first decade of this century the
contradictions and strains that such a society produces. Economic
divides among states and individuals are widening swiftly. Risks
and uncertainties are on the increase. Free competition produces
only one winner. The quintessential case of this is Microsoft's
Windows.

Even if the government strengthens the Anti-Monopoly Law, it will
not be able to stem the winner-takes-all trend. Usual methods,
such as the redistribution of income by means of the income tax,
are not sufficient in correcting income disparity among
individual workers. An egalitarian society means a society that
does not eliminate anybody.

Jobless people mean people who have the desire to work but are
excluded from the workforce. The US society is affluent, but it
is said that 17% of Americans are not covered by any health
insurance program. Those who work with large companies can
subscribe to an insurance scheme at a lower cost, but self-
employed persons have to pay higher premiums. In other words, 17%
of American people are denied medical services.

It is true that Japan's market economy has aspects that are not

TOKYO 00001444 010 OF 010


free, clear or fair. It is necessary to reform the market economy
to realize a free, transparent and fair mechanism. At the same
time, reform efforts to create a third way of building an equal
welfare society, where nobody is denied, must be promoted.

As a feature of a post-industrial society, accounting fraud tends
to become rampant, compared with a society based on goods
manufacturing. False business transactions by Enron and WorldCom
occurred, because distribution of goods is invisible in trade in
electricity and information and telecommunications. Anything goes
in such industries, if companies collude with accounting firms.
The Livedoor incident is a sign of accounting fraud becoming
rampant.

Another important role for government to play is to scrupulously
monitor whether rules of the market economy are being observed.
Those who violate the rules must be punished. Otherwise, a sound
market society cannot develop.

Takamitsu Sawa: Born in 1942 in Wakayama Prefecture. Graduated
from the Tokyo University Economics Department. Serving as a
professor at Kyoto University since 1980, after serving as an
associate professor at Illinois University. Kyoto University
Economic Research Center since 1990. His works include: "End of
Market Economy" and "Prevent Global Warming."

(Interviewer: Economic News Section reporter Shigeki Kurokawa)

SCHIEFFER