JAPANESE MORNING PRESS HIGHLIGHTS 03/23/06

UNCLAS SECTION 01 OF 13 TOKYO 001495

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SIPDIS

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SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 03/23/06

Index:

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

4) President Bush plans to show "my friend" Prime Minister
Koizumi the former home of Elvis Presley during upcoming US visit

Iran issues:
5) To pressure Iran on nuclear standoff, US has asked Japan to
freeze participation in Azadegan oil field project
6) METI not planning to change its plan to participate in
Iran's Azadegan oil field project

7) Foreign Minister Aso concerned about US, India nuclear
cooperation

China connection:
8) Foreign Minister inclined to postpone yen-loans to China due
to worsening bilateral ties
9) Foreign Ministry's Diplomatic Blue Book mention's concern
for China's arms buildup for the first time

10) First ever private sector person appointed consul general to
New York: former Mitsubishi president Sakurai

11) Prime Minister Koizumi stresses that Japan will make its own
decision on pulling out SDF troops from Iraq

Defense and security issues:
12) Still no exit in sight in USFJ realignment talks still
stalled over Futenma relocation and Guam relocation cost issues
13) Nago City may hold the key to successful conclusion of USFJ
realignment talks
14) Government and Nago City in a tug-of-war over revising the
plan to relocate Futenma functions to Camp Schwab site

Political agenda:
15) Minshuto lawmaker Nagata testifies in Diet committee on e-
mail caper, but clams up on source, refuses to quit Diet seat
16) LDP, New Komeito planning to submit constitutional
referendum bill to Diet with session
17) Socialist and Communist party leaders meet to exchange views

18) METI simulation predicts annual 2.2% economic growth

Articles:

1) TOP HEADLINES

Asahi:
Education Ministry's survey: one in 11 public high school
students received tuition waivers and cuts in FY2004

Mainichi:
JAL flew plane 41 times without checking landing gear

Yomiuri:
Government to allow smaller traffic signs around tourist
attractions, first in Kanazawa City


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Nihon Keizai:
Japan Post Co. mulls buying computer system from major bank

Sankei:
US asks Japan to freeze Azadegan oil field development

Tokyo Shimbun:
Issuance of entertainment visas for Filipino women drops by 40%
last year

2) EDITORIALS

Asahi:
(1) Minshuto (Democratic Party of Japan) must quickly resolve
email fiasco
(2) China, Russia should not forget responsibilities as major
powers

Mainichi:
(1) PSE mark: Political responsibility needed
(2) Spring high-school baseball: Thinking about fundamentals

Yomiuri:
(1) Unification of kindergarten and nursery school systems is
too late
(2) Minshuto must put end to email uproar and make fresh start

Nihon Keizai:
(1) Tokyo Sock Exchange's management setup unsatisfactory
(2) China, Russia aim at practical benefits and seek to check US

Sankei:
(1) Lawmaker Nagata's apology: Why doesn't Minshuto take legal
steps?
(2) Revival of mass hiring: Rethink the importance of nurturing
new employees

Tokyo Shimbun:
(1) New law to support technical improvement: Development of
human resources should not be forgotten
(2) Cultural exchanges between Japan, China, and South Korea:
Expanding diverse cultures

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, March 22

NIHON KEIZAI (Page 2) (Full)
March 23, 2006

08:34
Cabinet meeting in the Diet building. Defense Agency Director
General Nukaga stayed on.

09:50
Met with Chief Cabinet Secretary Abe at the Prime Minister's
Official Residence.

10:00
Met with former Foreign Minister Machimura.

11:00

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Met with Ambassador to the UN Oshima

14:05
Met with President Franz Humer of Swiss pharmaceutical firm Roche
and Chugai Pharmaceutical President Osamu Nagayama. Then met with
Foreign Minister Aso and Vice Foreign Minister Nishida.

15:05
Met with Land, Infrastructure, and Transport Minister (MLIT)
Kitagawa and Vice Minister Sato.

16:35
Met with former Vice LDP President Yamasaki.

17:17
Comprehensive Science and Technology meeting.

18:14
Met with Minister of Education, Culture, Sports, Science, and
Technology (MEXT) Kosaka, Chief of the MEXT Secretariat Tamai,
and Lifelong Learning Policy Bureau Director General Tanaka.

18:51
Arrived at the official residence.

4) President Bush to give "my friend" Prime Minister Koizumi tour
of Elvis Presley's former residence during US visit

SANKEI (Page 2) (Full)
March 23, 2006

Prime Minister Junichiro Koizumi is scheduled to visit the US in
late June. In this connection, coordination is now under way for
President George Bush to show Koizumi around the former residence
of the later rock star Elvis Presley in Memphis, Tennessee,
following their summit meeting in Washington. This was revealed
on March 21 by an informed Japan-US related source.

Koizumi is known to be a great fan of Presley. The same source
said that it was the president's idea to invite the prime
minister to Memphis.

Koizumi's US visit this time will be his last as prime minister.
The plan reflects the president's own wish to give him a warm
reception in view of their close friendship. Another aim is
presumably to play up the closeness of Japan-US relations through
warm treatment of Koizumi, with an eye on the upcoming summit
meeting with Chinese President Hu Jintao scheduled for April 20.

It is Bush's stock-in-trade to introduce during his whistle-stop
tours the episode that though Japan and the US were enemies
during World War II, in which his father, former president Bush,
served on active duty, nowadays the two nations are working hand
in hand in the war on terror. Bush has introduced Koizumi as a
Presley fan in the past as well.

When Bush invited former secretaries of state and defense to the
White House in January for an exchange of views, some
participants criticized him: "You are focusing only on Iraq. You
are not seeing to other issues." Bush immediately objected, "I
have a good relationship with Japan."


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Amid the growing criticism of the Bush administration due to the
Iraq issue, Bush presumably wants to appeal to the domestic
audience that his close relationship with Koizumi is a major
diplomatic achievement for him.

However, there is deep-seated dissatisfaction in Washington about
the way aides to the prime minister have handled such bilateral
issues as BSE and the USFJ realignment. The same source noted
that it would be a race against time as to whether these issues
can be settled before the summit, which, in a way, may be
characterized as the culmination of the Koizumi-Bush
relationship.

5) US asks Japan to suspend Azadegan oil field development; Oil
development project stands in the way of international efforts to
prevent Iran's nuclear ambitions

SANKEI (Top play) (Excerpts)
March 23, 2006

Yoshihisa Komori, Washington

In view of a growing international backlash against Iran's moves
to develop nuclear weapons, Bush administration officials,
including Deputy Secretary of State Robert Zoellick and Under
Secretary of State for Arms Control and International Security

SIPDIS
Robert Joseph, had informally requested Japan to stop the
development of the Azadegan oil field in Iran, a source familiar
with the US government revealed. Even in the US Congress, some
are notably moving to make a similar request to Japan. Given that
Washington has strongly called on Tokyo to suspend its oil field
development in Iran, depending on Japan's response, a serious
dispute could arise between Japan and the US.

The US has analyzed that given that Iran's nuclear ambitions have
now become evident, Japan's Azadegan project, a joint venture
between the government and private sector, could become a major
obstacle to international efforts to stem Iran's nuclear
development.

Reportedly, the US cites several reasons why it has made such a
request to Japan: 1) Japan's continuation of the Azadegan oil
project would greatly boost Iran's fiscal revenue and could help
that country to promote its nuclear program; 2) it would bolster
Iran's national strength and thereby help to expand the political
power of nuclear weapons; 3) it could disturb international
solidarity based on the UN or an international coalition to
prevent Iran's nuclear development; and 4) if a resolution for
imposing sanctions on Iran were adopted at the UN Security
Council, an embargo on the sale of Iranian oil and a prohibition
of oil-related investments in that country would likely be
implemented, and in such a case, Japan's project would violate
them.

The official stance of the Bush administration can be seen in US
Ambassador to the UN John Bolton's public reference in early
March to the connection between Iran's nuclear ambitions and
Japan's oil project in that country. Bolton was clearly appealing
to Japan to suspend its Azadegan project, saying: "We can
understand Japan's energy problem, but in view of Japan's
longstanding (commitment) to international nuclear
nonproliferation, it us far more important for Japan to work

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together to prevent Iran from possessing nuclear weapons."

In February 2004, Japan's Inpex Corp. played a key role in
concluding an oil field development contract with Iran and
invested 2 billion dollars. At the time, the US government raised
objections to Japan's move, but Japan insisted that if it
cancelled, a French company would step in. Reportedly, Japan
obtained a certain degree of understanding from the Bush
administration.

This time, too, some in Japan argue that if Japan withdraws, then
China will move in. But Brookings Institution's Senior Fellow Ivo
Daalder argues: "China does not have highly advanced technologies
needed to develop the Azadegan oil."

6) Azadegan oil project: METI sees hope in diplomatic efforts, no
change in its policy of independent development

SANKEI (Page 3) (Excerpts)
March 23, 2006

Japan depends on Middle Eastern nations for about 90% of its oil
supplies, so it is a major challenge for Japan to secure oil
fields it has independently developed. The Ministry of Economy,
Trade, and Industry (METI) played a leading role in promoting
negotiations with Iran on the Azadegan oil field and succeeded in
reaching an agreement despite American objections. But
international criticism of Iran's nuclear program is
intensifying. Japan finds itself forced to make a difficult
decision, facing a dilemma about how to firmly maintain the Japan-
US alliance and how to look for ways to work together with the
rest of the world, in addition to how to establish energy
security through independent oil development.

Iran ranks third among oil exporters to Japan. Japan has
maintained friendly relations with Iran even after the United
States broke diplomatic ties with that country. But the US is
voicing concerns about Iran's nuclear weapons program, and it is
becoming more likely that the international community will move
to impose economic sanctions on Iran.

In February, METI Minister Toshihiro Nikai expressed his
continued enthusiasm for developing the Azadegan oil field at a
press conference, saying, "Naturally, we will continue the
development." Meanwhile, a senior METI official met with Iranian
Ambassador to Japan Talaei and urged Iran to stop its nuclear
program. But the ambassador insisted, "Our development is for
peaceful purposes." The talks went nowhere.

METI remains enthusiastic, with one official saying, "There is no
change in our policy," but when it comes to economic sanctions,
METI's position is that of an observer that will simply watch how
debate unfolds in the United Nations Security Council. So, METI
cannot take any effective action.

7) Foreign Minister Aso concerned about US-India nuclear
cooperation

NIHON KEIZAI (Page 2) (Full)
March 23, 2006

Appearing in the House of Councilors Foreign Affairs and Defense

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Committee yesterday, Foreign Minister Taro Aso expressed concern
about the agreement between the United States and India, which is
not a signatory of the Nuclear Nonproliferation Treaty (NPT),on
nuclear-power cooperation for civilian use. He said: "I am most
concerned about the (NPT regime) being turned into an empty
shell." The Foreign Minister revealed that during the recent
Japan-US strategic dialogue with Secretary of State Rice, "Though
we're being asked to give our approval, it is not that simple to
do."

8) MOFA decides to put off cabinet decision on yen loans to China
for fiscal 2005, reflecting worsening relations

MAINICHI (Page 2) (Full)
March 23, 2006

The Ministry of Foreign Affairs (MOFA) decided yesterday to put
off a cabinet decision on the nation's yen loans to China for
fiscal 2005. The ministry usually makes a decision at the end of
a fiscal year. This year, though, the ministry has judged it
difficult to obtain agreement from the ruling parties on a plan
for official development assistance (ODA) disbursements for
China, reflecting strained relations between Japan and China over
Prime Minister Junichiro Koizumi's visits to Yasukuni Shrine and
gas field development in the East China Sea. MOFA will explain
the decision in a meeting of the Liberal Democratic Party's
councils related to foreign affairs this morning.

Japan started offering ODA to China in fiscal 1980 in lieu of war
reparations. The amount of yen loans, which account for most of
the ODA funds for China, reached 214.4 billion yen in fiscal

2000. Reflecting China's remarkable economic growth, Japan has
sharply decreased yen loans to China in recent years. The
Japanese and Chinese governments agreed in March of last year
that Japan would end new yen loans by the Beijing Olympic Games
in 2008. Both sides exchanged notes on March 29 of last year
specifying that Japan would provide 85.9 billion yen for nine
projects in fiscal 2004. This has already been approved at a
cabinet meeting.

MOFA was scheduled to make a cabinet decision on a yen-loan plan
for China late this month, but Liberal Democratic Party members
have fiercely reacted to China's proposal during bilateral talks
in Beijing on March 7 for joint development of gas fields in
waters near the Senkaku Islands. MOFA has decided to postpone a
decision on yen loans to China for the time being and carefully
watch China's response in gas field talks.

9) Diplomatic Blue Book for first time refers to "non-
transparency" of China's military buildup

ASAHI (Page 2) (Full)
March 23, 2006

The Foreign Ministry unveiled the contents of its 2006 Diplomatic
Blue Book yesterday. This year's version noted: "There are still
nontransparent aspects of China's increased military spending and
modernization of its military power." The Defense Agency has
referred to a lack of transparency of China's defense spending in
its annual defense white paper, but this is the first time for
the Foreign Ministry to have pointed out this problem.


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The blue book contains this comment of China's reaction to Prime
Minister Koizumi's visits to Yasukuni Shrine: "In an effort to
prevent differences in our views in specific areas from blocking
the development of the overall relationship between Japan and
China, we should try to resolve the problem through serious
dialogue." On China's economic development, the blue note
welcomed it as "providing a 'good opportunity' for the future of
Japan." The book also touched on gas field development in the
East China Sea: "Keeping the possibility of joint development in
mind, we will aim at reaching agreement through dialogue."

10) Former Mitsubishi International Co. President Sakurai picked
as consul general in New York

ASAHI (Page 4) (Full)
March 23, 2006

The Foreign Ministry announced yesterday that Motoatsu Sakurai,
former president of Mitsubishi International Corp., would be
appointed as consul general in New York as of March 23. Sakurai
is the first private-sector person to be named as consul general
although some have been appointed as ambassadors. The appointment
is part of reform of the Foreign Ministry. The ministry explained
that Sakurai is an expert in economic and financial areas and is
well versed in Japan-US affairs and the international situation.

Sakurai began his career at Mitsubishi Corp. in 1968 after
graduating from the University of Tokyo. He was assigned to
Mitsubishi International Co. (headquartered in New York) from
1984 to 1996. He lived in the United States for a long time. From
2003 to March 20, 2006, he served as present of Mitsubishi
International Co.

11) Japan will make independent decision on SDF troops'
withdrawal from Iraq

SANKEI (Page 5) (Full)
March 23, 2006

US President Bush has given his outlook that it will be difficult
to decide on the withdrawal of all US troops stationed in Iraq
while he is in office. Referring to this statement, Prime
Minister Koizumi last evening stated: "Japan will consider the
matter from its own position. President Bush meant that the US
would steadily fulfill its responsibility from its own position,
as long as the Iraqi people and their government say they need US
troops." He made this statement in reply to a question asked by a
reporter at the Prime Minister's Official Residence (Kantei).

12) USFJ realignment: No way out found

NIHON KEIZAI (Page 2) (Full)
March 23, 2006

Japan and the United States will resume another round of
intergovernmental consultations today in Tokyo on a number of
pending issues regarding the realignment of US forces in Japan,
with their senior officials for foreign affairs and defense
attending. The Tokyo round, however, would inevitably face rough
going over how to share the cost of moving US Marines from
Okinawa to Guam. Meanwhile, the government has now started
coordination with the city of Nago, Okinawa Prefecture, over the

TOKYO 00001495 008 OF 013


issue of relocating the US Marine Corps' Futenma Air Station from
its current location in the Okinawa prefectural city of Ginowan
to a coastal area across the cape of Henoko on the premises of
Camp Schwab in Nago. However, Tokyo and Nago are squaring off
with each other over the city's request to modify the
government's coastal relocation plan. In the meantime, the
Japanese and US governments are slated to reach a final agreement
late this month on specific realignment plans. With the time
limit approaching, Tokyo remains unable to find a way out of its
standoff with Washington and with Okinawa's base-hosting
municipalities.

"US warplanes will fly over residential areas-that's the
problem," Nago Mayor Yoshikazu Shimabukuro said in a meeting with
government officials over the Futenma relocation issue. "That's
why we can't accept the government plan," the mayor added.

Encountering the mayor's rejection, Defense Agency Deputy
Administrative Director General Takemasa Moriya laid emphasis on
security, environmental, and various other aspects. "The coastal
plan came out of the agreement reached between Japan and the
United States," Moriya explained. "This plan stands on a balance
of everything," he said.

The meeting took place yesterday at the Defense Agency. However,
the agency and local authorities from the Nago City municipal
government failed to reach an agreement over the Futenma
relocation site, following their meeting held the day before
yesterday. Defense Agency Director General Fukushiro Nukaga used
to rule out any modifications to the coastal plan. On March 21,
however, Nukaga suddenly changed course to imply his intention of
retouching the coastal plan. That's because Nukaga wanted Nago
officials to sit down at the table for talks.

The government is sticking to 'minor changes' to the coastal
plan. "From the start, there's no change in the government's
master plan," Prime Minister Junichiro Koizumi said yesterday
evening. "I don't say we'll never ever change even one centimeter
(to move the relocation site),but this is everything," Koizumi
stressed.

However, Shimabukuro, calling for 'substantial changes' to the
plan, was tough in yesterday's meeting, too. The mayor asked the
Defense Agency to modify the coastal plan and insisted on moving
down the planned construction site to an offshore area several
hundred meters away from the coast of Camp Schwab.

The mayor's tough stand was backed by ruling Liberal Democratic
Party leaders seeking to concur with Okinawa's base-hosting
municipalities on specific realignment issues. Taku Yamasaki,
chair of the LDP's security affairs panel, called on Koizumi
yesterday at his office. Yamasaki there asked Koizumi to meet
with Okinawa Governor Keiichi Inamine to talk about the Futenma
issue.

"I want him to meet with the director general of the Defense
Agency," Koizumi told Yamasaki. The Defense Agency, however, is
alert to the LDP's moves. Both Koizumi and the Defense Agency
have a question about Nago's counterproposal. "Nago City's
counterproposal could become another case of the Nago offshore
heliport plan," one of the agency's officials noted. The
government had initially planned to build a sea-based heliport in

TOKYO 00001495 009 OF 013


waters off the coast of Henoko in Nago. Eventually, however, the
offshore heliport plan encountered opposition from
environmentalist and other local groups. The key for the
government to modify the coastal plan is feasibility.

Furthermore, Japan and the United States have also seen little
progress in their intergovernmental coordination. The US
government, estimating the total cost of Marine relocation from
Okinawa to Guam at 10 billion dollars or 1.18 trillion yen, has
asked the Japanese government to pay 75% or approximately 880
billion yen. On the other hand, the Japanese government estimates
the total cost at 940 billion yen. Tokyo plans to pay about 40%
or approximately 380 billion yen. For the rest, Japan loans money
to the US government. As seen from these figures, the two
governments remain wide apart in their respective assertions.

Another realignment issue is the planned redeployment of an air
tanker fleet from Futenma airfield to another base. The Japanese
government has offered Kanoya base in Kagoshima Prefecture as
incorporated in the interim report, while the US government has
been sticking to Iwakuni base in Yamaguchi Prefecture. The two
governments are still facing off with each other over their
respective proposals.

In addition, there is also an idea being floated from within the
government to wrap up the talks just for the sake of a final
agreement between the two countries and continue to consult on
pending issues. The United States, however, is thinking much of
its local hosts' consent. Washington is therefore unlikely to
accept such an idea. There is also no denying that the two
governments might reschedule their final settlement for a later
date.

13) Futenma relocation: Nago's response is key; Koizumi says
government will not make compromise other than minor changes to
coastal plan

MAINICHI (Page 2) (Full)
March 23, 2006

The government remained uncompromising regarding a Camp Schwab
coastal plan, while Nago City in Okinawa Prefecture called for
making major changes to adopt an offshore plan. In their talks
March 21-22 on the planned relocation of the US Marine Corps'
Futenma Air Station, Defense Agency officials led by Director
General Fukushiro Nukaga exchanged views with Nago Mayor
Yoshikazu Shimabukuro. They also confirmed their intention to
energetically continue talks until the end of this month when the
Japanese and US government would produce a final report on the
realignment of US forces in Japan. In the talks that officially
started with Nago, the government expressed its willingness to
make "minor changes" to the coastal plan. The focus has now
shifted to Nago's response.

In explaining his opposition to the coastal plan, Shimabukuro
told Defense Agency officials: "US aircraft would have to fly
over some houses. That worries me the most." In response, a
Defense Agency official indicated that the Nago-proposed offshore
plan would destroy the marine habitat for dugongs, a protected
species. The Defense Agency rejected Nago's call for major
changes, saying, "The coastal plan is the best possible option,
giving consideration both to the living environment for residents

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and the natural environment."

Although the two sides seem wide apart on the surface, the
Defense Agency is paying attention to the flight route, which
Nago pointed out as a problem associated with the coastal plan.
The agency is envisaging a plan to slightly change the position
and direction of the runway so that US aircraft will not fly over
houses. But the agency did not present specific changes in the
March 21-22 talks. "One minor change from our side would elicit a
demand for additional changes from Nago," an agency official
explained. The Defense Agency's strategy is to urge Nago to come
up with a slightly modified plan in a bid to find a settlement
line.

Shimabukuro, however, reiterated his previous position of
accepting only variations to the offshore plan, while indicating
that he would take the government's plan to make minor changes to
Okinawa to consult with local residents and the city assembly.
Although some local residents are agreeable to the government's
policy to make minor changes, Okinawa Governor Keiichi Inamine is
adamantly opposed to the coastal plan.

Prime Minister Junichiro Koizumi played up the government's plan
not to make any compromise other than minor changes by stating to
reporters yesterday: "There will be no change in the government's
basic view, but that doesn't mean we will not change the plan by
even 1 centimeter."

14) Futenma relocation: Tug-of-war underway between government
and Nago; Government aims to settle issue before end of month by
making minor changes

YOMIURI (Page 2) (Full)
March 23, 2006

Talks yesterday between the central government and Nago, Okinawa
Prefecture, over the planned relocation of the US Marine Corps'
Futenma Air Station ended without reaching an agreement. Although
the government aims to win Nago's consent before the end of this
week on making "minor changes" to the government plan, some think
such would be difficult. The government wants to settle the issue
before the end of this month in tandem with a final report on the
realignment of US forces in Japan.

Defense Agency Director General Fukushiro Nukaga held talks with
Nago Mayor Yoshikazu Shimabukuro yesterday morning at his agency.
After the meeting, Nukaga praised the mayor, saying: "We
exchanged views candidly. He is a good fighter."

Following meetings the previous night, Defense Facilities
Administration Agency Director General Iwao Nakahara, Defense
Vice Minister Takemasa Moriya, and defense chief Nukaga
separately met with Shimabukuro yesterday morning.

Shimabukuro insisted: "The government plan would force US
military aircraft to fly over some houses. The plan would pose
problems in terms of the safety of residents and the noise." The
Defense Agency side, based on the Henoko plan that has stalled
due to protest by environmental groups, rebutted: "If the runway
was moved more than 450 meters further offshore in line with
Nago's demand, the marine forest used by the dugongs would be
damaged. Above all, Moriya, who is most dismissive of making any

TOKYO 00001495 011 OF 013


changes to the government plan, flatly dismissed Nago's call for
major changes, saying, "We cannot accommodate your request."
Reportedly the two sides also traded verbal jabs.

Neither side presented any new revised plan.

A Defense Agency official expressed hopes for future sessions,
saying: "Nago no longer refuses holding talks with the central
government. The matter has moved forward."

The government's willingness to make minor changes has drawn a
variety of reactions from the Nago municipal assembly.

The vice speaker lives in the Henoko district, the relocation
site for Futenma Air Station. He categorically said, "It would be
meaningless to continue talks unless they are conducted in line
with a revision plan presented by Nago."

Although the government is expected to present Nago with specific
minor changes to the plan, winning Nago's consent will not be
easy. "In the end, the government may have to ram through its
plan," a Defense Agency official said.

15) Minshuto unable to find way to break impasse over fake e-mail
fiasco; Nagata refuses to resign

MAINICHI (Page 5) (Full)
March 23, 2006

In his explanation before the House of Representatives' Committee
on Discipline yesterday, Lower House lawmaker Hisayasu Nagata
apologized for having introduced a fake e-mail as evidence during
a Diet session. On the question of whether or not he will resign,
however, Nagata would only say: "I will make a decision based on
the committee's consensus." The Democratic Party of Japan
(Minshuto) has suspended Nagata's membership. Amid the e-mail
issue dragging on with no prospects still in sight for its
settlement, calls are likely to grow for Nagata to resign his
Diet seat.

Speaking to reporters after Nagata's explanation before the
committee, Minshuto Secretary General Yukio Hatoyama said he
expected that Nagata would resign voluntarily. Hatoyama said:
"(Nagata) understands that there are various views inside and
outside the party. He should make a decision based on his own
judgment." But a senior party member who is in contact with
Nagata said: "He has no intention of resigning."

Minshuto is worried about the ruling camp's heightened demands.
It first demanded "Nagata's explanation" at the Committee on
Discipline, "questioning" next, and then "a summon of his
informant as a sworn witness to the Diet." The opposition party
wants to avoid the last case, because the party remains unable to
contact the informant, and it "cannot predict what would crop
up," according to a senior party member.

Within Minshuto, though, views have not been unified. On the
proposed summoning of the informant as a witness to the Diet,
Discipline Committee Chairman Tetsundo Iwakuni (Minshuto)
indicated a willingness to accept the proposal, saying: "The view
dominant in the committee board is that the committee should
reach a conclusion after the informant is questioned." Should

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Nagata stay on, the party executive might come under heavier
fire.

In the ruling bloc, Discipline Committee board member Yoshinobu
Shimamura of the Liberal Democratic Party said that the
explanation by Nagata was insufficient. Secretary General Tsutomu
Takebe called for a more detailed explanation, saying: "The
people are expecting more details, including the purpose and
motives behind his having brought up the e-mail issue during the
Diet session."

16) LDP, New Komeito may introduce national referendum
legislation independently of DPJ

SANKEI (Page 5) (Full)
March 23, 2006

Liberal Democratic Party (LDP) Executive Council Chairman Akio
Kyuma yesterday gave a speech in Niigata City. Referring to the
slow process in the coordination of views between the ruling
parties and the Democratic Party of Japan (DPJ = Minshuto) over
the specifics of a national referendum on constitutional
revisions, he noted: "There is a move for the LDP and the New
Komeito to introduce a bill on their own. I think the bill will
be introduced during the current Diet session." He thus revealed
the possibility of the ruling parties submitting the bill
independently of the Democratic Party of Japan (DPJ = Minshuto).
Under the ruling party-sponsored bill, those aged above 20 will
be eligible for voting, while the DPJ has proposed that those
aged above 18 should be allowed to vote. It is viewed that Kyuma
made that statement with the aim of winning concessions from the
DPJ, by laying a restraint on it.

17) Top leaders of JCP, SDP finally hold talks

ASAHI (Page 4) (Full)
March 23, 2006

Japanese Communist Party (JCP) Central Committee Chairperson
Kazuo Shii and Social Democratic Party (SDP) Chairperson Mizuho
Fukushima met last night at a Tokyo restaurant. The two party
leaders, who have called for preventing constitutional reform,
agreed to oppose a national referendum bill although other
parties are trying to present the bill to the Diet. They also
confirmed that their parties would strengthen joint efforts.

The meeting was held at the request of Shii. In the meeting, Shii
said, "I was encouraged by party head Fukushima's remark that the
two parties can cooperate to prevent constitutional reform."
Fukushima then responded, saying, "I'm glad that we can exchange
views with the JCP as a key coalition partner."

It was the first time for the top leaders of the JCP and SDP to
hold talks since then Japan Socialist Party Chairman Kazuo
Asukata and then JCP Chairman Kenji Miyamoto met in June 1978.
However, a senior SDP member commented, "We should not obstruct
moves to expand activities outside the Diet." "The meeting is
part of our efforts to exchange views with various persons," said
Fukushima. The JCP side commented: "The meeting this time was
informal."

18) METI simulation predicts annual 2.2% real GDP growth

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ASAHI (Page 2) (Full)
March 23, 2006

In a press conference after the cabinet meeting yesterday,
Ministry of Economy, Trade and Industry (METI) Minister Nikai
said that the ministry's simulation has predicted real 2.2%
growth in gross domestic product (GDP) annually between fiscal
2004 and fiscal 2015 if a new economic growth strategy - now
being worked out by METI - is implemented. Under the METI
scenario, the nation's potential economic growth would be buoyed
up by a revitalized services sector, the utilization of IT, and
technological renovation. METI plans to present the scenario in a
meeting of the Council on Economic and Fiscal Policy on March 29.
On the nation's estimated economic growth, heated discussion is
going on in the government and the ruling parties has now been
joined by METI.

The Reform and Prospects - compiled by the Cabinet Office in
January - predicted that the country could post a real 1.7%
growth and nominal 3.2% increase in GDP for fiscal 2011. METI
estimates nominal growth rate in fiscal 2015 at 3.6%.

SCHIEFFER