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2006-03-28 08:13:00
Embassy Tokyo
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DE RUEHKO #1616/01 0870813
P 280813Z MAR 06
						UNCLAS SECTION 01 OF 16 TOKYO 001616 




E.O. 12958: N/A


(1) Poll of LDP lawmakers on post-Koizumi candidates; Abe tops
list; Consumption tax a major issue

(2) Yasukuni issue likely to become major campaign issue for LDP
presidential race; Abe and his support group changes

(3) Light and shadow of what "Koizumi politics" has created over
the past five years - Changing society (part 1): Economy has
recovered but many of the weak left behind due to transitional
pain, competition

(4) Light and shadow of Koizumi politics-- five years of
accomplishments (part 2): Regional disparity - urban areas
enjoying prosperity, while regional communities stagnant

(5) USFJ realignment: Japan should not flinch from negotiating
relocation cost

(6) Iwakuni and Okinawa plebiscites exhibited need for government
to offer explanations fairly and squarely; Sources of distrust
must not be expanded

(7) Beef imports from Mexico, China gradually increasing, though
BSE risk remains unknown

(8) BSE risk: Structural defects found in US inspection system;
Safety procedures must be observed to reduce BSE risk


(1) Poll of LDP lawmakers on post-Koizumi candidates; Abe tops
list; Consumption tax a major issue





E.O. 12958: N/A


(1) Poll of LDP lawmakers on post-Koizumi candidates; Abe tops
list; Consumption tax a major issue

(2) Yasukuni issue likely to become major campaign issue for LDP
presidential race; Abe and his support group changes

(3) Light and shadow of what "Koizumi politics" has created over
the past five years - Changing society (part 1): Economy has
recovered but many of the weak left behind due to transitional
pain, competition

(4) Light and shadow of Koizumi politics-- five years of
accomplishments (part 2): Regional disparity - urban areas
enjoying prosperity, while regional communities stagnant

(5) USFJ realignment: Japan should not flinch from negotiating
relocation cost

(6) Iwakuni and Okinawa plebiscites exhibited need for government
to offer explanations fairly and squarely; Sources of distrust
must not be expanded

(7) Beef imports from Mexico, China gradually increasing, though
BSE risk remains unknown

(8) BSE risk: Structural defects found in US inspection system;
Safety procedures must be observed to reduce BSE risk


(1) Poll of LDP lawmakers on post-Koizumi candidates; Abe tops
list; Consumption tax a major issue

SANKEI (Page 1) (Abridged slightly)
March 28, 2006

The Sankei Shimbun has conducted an opinion poll of the 408 Upper
and Lower House members belonging to the Liberal Democratic Party
(LDP) to find out the trend for the party's presidential election
in September. The results showed that Chief Cabinet Secretary

Shinzo Abe was the front-runner for the LDP presidency,
underpinning his popularity in public opinion polls and in the
LDP. Many also cited fiscal reconstruction and policy toward Asia
as major policy issues. Heated debates are likely to occur in the
post-Koizumi race on both the domestic and diplomatic fronts.

The survey was conducted on March 16-27. Replies came back from a
total of 161 lawmakers: 136 from the Lower House and 25 from the
Upper House. The retrieval rate was 39.5%.

Of them, 91 named specific individuals as fit to become the LDP's
new president. Possible presidential candidates were named in the
following order: (1) Shinzo Abe by 27 members; (2) former Health,
Labor and Welfare Minister Bunmei Ibuki (head of the Ibuki
faction) by 14; (3) Finance Minister Sadakazu Tanigaki (head of
the Tanigaki faction) by 12; (4) former Chief Cabinet Secretary
Yasuo Fukuda by 11; (5) Foreign Minister Taro Aso by 10; and (6)
former LDP Vice President Taku Yamasaki by seven.

Abe has been boasting national popularity in a variety of public
opinion polls. The results reflected the strong expectations of

TOKYO 00001616 002 OF 016

junior and mid-level lawmakers, in addition to the Mori faction
where he belongs.

The list of policy issues was topped by fiscal reconstruction
including the consumption tax, with 100 lawmakers citing it. The
choice offered a glimpse into the lawmakers' strong interest in a
tax hike, the issue that may affect the future of the
administration, with the Upper House lection scheduled to take
place next year. Eighty lawmakers pointed out policy toward Asia,
including the Yasukuni issue, and 62 people cited the
continuation and revision of the Koizumi structural reform drive.

Regarding specific policy issues, 64 said the government must
decide on a consumption tax hike during the term of the next
prime minister, while 66 said such was unnecessary. The outcome
clearly reflected the conflict between the government and the

Additionally, 70 people said that the next prime minister should
visit Yasukuni Shrine, while 36 opposed to a shrine visit.

The list of qualities required of the new leader was topped by
policy capability with 115 members mentioning it, followed by
strong presence for elections, abundant experience in politics,
and top-down leadership.

(2) Yasukuni issue likely to become major campaign issue for LDP
presidential race; Abe and his support group changes

ASAHI (Page 2) (Full)
March 28, 2006

Hidenao Nakagawa scrambling for prior settlement

Prime Minister Junichiro Koizumi and potential candidates to
succeed Koizumi, including Chief Cabinet Secretary Shinzo Abe,
have stated in chorus that the issue of visits to Yasukuni Shrine
by prime minister should not be made a major campaign issue in
the September presidential election of the Liberal Democratic
Party (LDP). However, the view is now becoming stronger in LDP
regional chapters that presidential candidates should talk about
their own Asia policy. Such a local perception is now reflected
in LDP headquarters. The local move has boosted the momentum of
former Chief Cabinet Secretary Yasuo Fukuda, and it has brought
about a strategic change to Abe and his supporters.

In a meeting on March 22 at the Hotel New Otani in Tokyo, LDP
Policy Research Council Chairman Hidenao Nakagawa told Chon
Bichien, director of the reform and liberalization forum, who is
regarded as a brain-trust advisor to Chinese President Hu Jintao:

"Since Foreign Minister Taro Aso is a Christian, he does not care
about visiting Yasukuni Shrine. Mr. Abe has not visited the
shrine since he assumed the chief cabinet secretary's post."

During the meeting, Nakagawa suggested a summit between Prime
Minister Junichiro Koizumi and President Hu, which the Chinese
government has refused to hold. He apparently wants to put an end
to the Yasukuni issue while Koizumi is in office in order to have
Abe, whom he sees the most suitable person, smoothly succeed

Should Asia policy becomes a main campaign issue and if Abe

TOKYO 00001616 003 OF 016

mishandles the Yasukuni issue, he might be placed at a
disadvantage in the presidential race. In consideration of the
suspended talks between the top leaders of Japan and China,
Nakagawa is now shifting a focus on a breakthrough of the
political deadlock.

On Feb. 23, Nakagawa along with New Komeito policy chief
Yoshihisa Inoue, who also wants to put an end to the Yasukuni
issue, met in Beijing with Chon. During the meeting, Nakagawa
said to Chon, "If the Yasukuni issue becomes a main issue in the
presidential election, the issue will not be resolved as you have
hoped in consideration of Japanese public opinion." Inoue said,
"As a result of a summit between Prime Minister Koizumi and
President Hu, Koizumi's successor will not go to Yasukuni

Nakagawa and Inoue called on Chon to take a forward-looking
approach. The two meant that if the environment for a summit were
prepared, the next prime minister would be able to choose not to
visit the Shinto shrine. Chon dismissed the suggestion. He
argued: "Who can guarantee the next prime minister will not pay
homage at Yasukuni Shrine? Prime Minister has so far visited the
shrine five times."

The Chinese side cannot easily accept Nakagawa's proposal.

Koizumi stated yesterday, stressing his pet view, "Because I
visit Yasukuni Shrine, China does not hold a summit. I cannot
understand this."

Abe cautious about remarks

The focus is now on Abe's movements. Abe is regarded as having
hawkish foreign and security policies.

At a press conference held immediately after he assumed the chief
cabinet secretary post, Abe stated, "I have visited Yasukuni
Shrine as a Japanese national. I would like to continue to keep
this feeling." A lawmaker, who has close ties with Abe commented,
"He will visit the shrine even after he becomes prime minister."
On the advice of business leaders, however, he has refrained from
clarifying his view since he assumed his post. He recently
reiterated: "I would like to continue to have the feeling of
paying my respect to those who died for the nation."

Appearing on a TV Tokyo program on March 24, Abe criticized the
Chinese leadership, noting, "Not closing summit and foreign
minister-level communication channels shows the wisdom of a
mature country. It is wrong to suspend the talks between top
leaders." Meanwhile, he expressed enthusiasm for repairing the
strained bilateral ties through technical cooperation in the
energy area.

Calls have grown in political circles for Abe to make a policy

Former Prime Minister Yoshiro Mori recently talked about the
possibility of Abe visiting Yasukuni Shrine: "I think he will not
visit the shrine. I believe he will make a decision after
considering the timing, condition and place."

A veteran lawmaker said:

TOKYO 00001616 004 OF 016

"If he visits the shrine before the presidential race, that would
become a contentious issue. If he goes there after becoming prime
minister, his government would be shaken. Therefore, he should
choose a realistic option."

If Abe weakens his political identity, his popularity may
decline. A junior lawmaker close to Abe said, "I've heard that he
would express his determination to visit the shrine when he
declares his candidacy for the presidential race. Otherwise, he
will lose his policy imprint.

Foreign Minister Taro Aso, another post-Koizumi contender,
indicated that he would refrain from visiting Yasukuni Shrine. He
recently said, "National interests take preference over personal

Finance Minister Sadakazu Tanigaki, a possible successor to
Koizumi, remains unclear about his intentions regarding the
Yasukuni issue. He unsuccessfully sought a meeting with a Chinese
leader on the sidelines of recent Japan-China finance ministerial
talks in Beijing. He is eager to improve relations with China.

The existence of Yasuo Fukuda, who has gained public support even
though he denies he is a candidate, has induced changes in the
stances of Abe, Aso and Tanigaki. Fukuda has made it clear he
would repair the strained ties between Japan and China and Japan
and South Korea. According to the result of Asahi Shimbun's March
poll, 20% of the respondents said that Fukuda would be the
suitable person to be the next prime minister, while 47% said Abe
would be the best for the post.

An anti-Abe lawmaker was happy with the 20% support for Fukuda,
saying, "It has now become clear that the Yasukuni issue could be
the top issue in the presidential race. Fukuda may yet be able to
defeat Abe."

(3) Light and shadow of what "Koizumi politics" has created over
the past five years - Changing society (part 1): Economy has
recovered but many of the weak left behind due to transitional
pain, competition

TOKYO SHIMBUN (Top play and page 2) (Full)
March 26, 2006

Five years ago, with the country increasingly distrustful of
politics, the Koizumi administration came into power, winning
exuberant support from the public. Its political style has
significantly changed the paradigm of the Japanese society. The
economy has succeeded in overcoming the long slump that had
continued since the burst of the economic bubble around 1990. But
the new competition-oriented policies have given rise to such
adverse-effects as dividing the society into winners and losers,
as well as widening the economic gap between big cities and rural
areas. What was "Koizumi politics" anyway? With the approval of
the fiscal 2006 budget bill on March 27, political challengers
who want to succeed Prime Minister Junichiro Koizumi are likely
to pick up steam and start campaigning (for the Liberal
Democratic Party presidential election scheduled for September).
Before the campaign starts, the Tokyo Shimbun probes into what
has actually happened over the past five years.

Balance of reforms

TOKYO 00001616 005 OF 016

"When will the end of the rainy season be announced?" A somewhat
out-of-season remark is beginning to come out from some
government officials at Japan's government offices district,
Kasumigaseki, Tokyo, since this the time when the cherry trees
are beginning to bloom.

The Japanese economy, which has suffered from deflation for
years, is clearly on a recovery track now -- in terms of economic
indicators and corporate performances. Can Prime Minister Koizumi
crown the last phase of his tenure before stepping down in
September by declaring that Japan's departure from deflation?
This question, in part because of its political implications, is
drawing attention.

At a time when the economy was worsening, the Koizumi
administration came into existence waving the banner of
structural reform. In the fall of 2002, it adopted a tough policy
aimed at speeding up the disposal of sour bank loans, which had
crippled the economy. The administration's goal was to halve the
ratios of nonperforming loans held by major banks by the end of
March 2005.

Business leaders and politicians were quick to erupt into anger
against the reforms. In the spring of 2003, the Nikkei Stock
Average dipped below the 8,000 yen level. Not only there was an
increase in the number of bankruptcies but the number of suicides
due to financial difficulties also jumped. Moral decay was
noticeable, and heinous crimes broke out frequently across the
country. But the stock market started to rise once the government
made a decision to inject public money into the Resona Group.
Leading banks one after the other began to restructure, and
distinguished firms like Daiei were driven to the verge of
bankruptcy. But owing to their efforts, they achieved the goal of
halving their bad loans by the end of March 2005.

Banking institutions are likened to the blood of the economy.
When their businesses return to normal, the economy, too, comes
to life. Big banks have recovered their business performances so
remarkably that they are even being criticized now as making too
much profit. They are turning around their previous recruitment
scheme to an offensive one, departing from the long constraint on
hiring new graduates.

"It's no good to ask for everything from the government." Late
last year Koizumi made this remark in a speech at a symposium
hosted by an economic organization. This remark is indeed what
Koizumi has insisted on in his effort to promote economic

Koizumi urged firms to dispose of their nonperforming loans using
their own efforts, so he did not implement any notable economic
stimulus packages for them. He had no choice but to do so perhaps
because of fiscal difficulties on the government side, but this
attitude made corporate executives definitely determined to
think, "We no longer can depend on the government."

Steel, once a star industry, is enjoying an unprecedented boom
now. This is the result of their internal reforms by repeating
restructuring and streamlining.

Looking back on past years, Fumio Sudo, president of the JFE
Holdings, a leading steel firm that was born by the merger of NKK
Corp. and Kawasaki Steel in September 2002, remarked: "Prime

TOKYO 00001616 006 OF 016

Minister Koizumi continued to signal a message that he would
destroy old mechanisms. Private firms had the sense of crisis
that the only way to survive would be self-reliant efforts. His
message and this sense of crisis were both heading for the same
direction." On the other hand, there are some who take a cool
view that it is incorrect to say that the economy has revived
owing to structural reforms, arguing: "(Mr. Koizumi) happened to
be in office during the recovery cycle of the economy." But it
seems possible to judge him as fulfilling his responsibility to a
certain degree for the consequences of the most challenging task
for his administration, even though he may be seen as a "lucky
prime minister" helped by favorable winds, such as special
procurement demand from China.

"I hope reforms will be carried out without causing pain,"
Koizumi said after inspecting in mid-January a small firm
manufacturing medical injection needles at Sumida Ward, Tokyo.

Firms that survived the pain have succeeded in restructuring
their businesses, but firms that were unable to do so were forced
to go bankrupt. Middle-aged and older unemployed citizens were
walking the streets. "No growth without reforms" -- under this
buzzword, some successfully opened up new business opportunities
to become winners, but there are many losers, too, who even now
remain unable to get out of the mire.

The strong enjoy more benefits in a society with widening
disparity; Long struggle for employment after corporate
restructuring-caused layoffs

"People who are here are still lucky. Those who have abandoned
their efforts to find a job do not come here." A 58-year-old man
who we will call Shoichi Takahashi, made this remark at the job
placement agency, Hello Work Shinjuku, located on the 23rd floor
of a skyscraper at the West Exit of JR Shinjuku Station, Tokyo.
Takahashi every morning from Monday through Saturday travels to
the agency from Kasukabe City, Saitama Prefecture, to look for a

Six years ago, Takahashi worked at a small firm manufacturing
mailing machines. He was in charge of quality and production
control, but he was forced to resign due to the company's layoff
program. Since then he has been looking for a job.

Finding a job is not easy for people in their fifties like
Takahashi. In most cases, he has been unable to get interviews
because he fails to meet the qualifications, for instance,
because of his lack of experience or his age.

So far Takahashi has twice found a part-time job concerned with
quality and production control. But after two weeks after working
as a part-timer, he was forced to quit because he did not get
along with the regular workers.

Looking back on that, Takahashi said: "Other workers kept away
from me presumably because I had worked in a similar post in the

Since then he has been unemployed. With no one to depend on and
living alone, he ended up on welfare three years ago. Setting
aside the room rent, he has to live on 70,000 yen per month.

Families on welfare like Takahashi reached 1,051,676 households

TOKYO 00001616 007 OF 016

as of December 2005. The number of such families has jumped from
777,638 households in April 2001, when the Koizumi administration
came into existence.

Various statistics vividly demonstrate that the public has been
hard up for money over the past five years since the Koizumi
cabinet was launched.

The average income of the head of a family (periodic income
excluding bonuses) was 373,321 yen per month in April 2001, but
it slipped to 350,099 yen in January 2006. The percentage of
households that said, "We have no savings," was 12.4% in 2000 but
in 2005, recorded 23.8%, the highest ever.

Companies are boosting profits, while households are badly off.
Dai-ichi Life Research Institute Senior Economist Naoki Iizuka
gives this analysis: "That is the result that companies that were
unable to pay the personnel costs pursued restructuring."

According to this institute's estimation, the labor distribution
rate, which indicates how much companies allocate their operating
income and other profits for the personnel expenses, began
dropping in the latter half of 2002, the year after the Koizumi
administration came into being. In the Oct.-Dec. quarter of 2005,
this rate came to 62.8%, the same level immediately after the
burst of the economic bubble around 1992. The decline in this
rate is negatively affecting those who were left out of the
benefits of the reforms like Takahashi. It is not easy for them
to rejoin the game.

However, responding to the criticism that (his reforms) are
widening social disparity, Prime Minister Junichiro Koizumi
argues: "(Disparity) is not necessarily a bad thing." "Even
though the gap is widened, if the minimum level of safety net is
prepared, it's not that hard for capable persons to get a bigger
slice of the pie," he adds.

What is felt from Koizumi's remarks is the nature of his reforms
that in order to attain the goal of economic growth, it is an
unavoidable choice to give a boost first to the strong and leave
measures for the weak on the back burner.

Asked about the so-called Koizumi reforms, Takahashi said: "I
don't agree with them. The disparity is widening. It seems our
society is getting worse."

(4) Light and shadow of Koizumi politics-- five years of
accomplishments (part 2): Regional disparity - urban areas
enjoying prosperity, while regional communities stagnant

TOKYO SHIMBUN (Page 1) (Excerpts)
March 27, 2006

Omotesando Hills (a huge multipurpose complex consisting of six
floors above ground and six below), the newest fashionable
shopping site in Tokyo, which opened in February, is crowded with
as many as 60,000 to 70,000 shoppers on weekends. There are 93
tenant shops and restaurants in the complex. Among the tenants, a
coffee shop sells a chocolate drink at almost 2,000 yen and
another shop carries pet bugs, the prices of one species being
more than 100,000 yen. Despite such expensive products, sales of
the shopping mall for the first month after the opening exceeded
1.4 times the estimated level. A spokesman of the management

TOKYO 00001616 008 OF 016

office said excitedly, "We can actually feel the economic

The downtown sections of Tokyo have been exploding in a rush of
redevelopment projects since 2001. Whenever new buildings were
built, Prime Minister Junichiro Koizumi visited them -- New
Marunouchi Building (Marubiru), Shiodome Shiosite and Roppongi

Koizumi said, "Such good buildings are being built and they are
always crowded with many people. I cannot believe Japan's economy
is in a slump."

However, there are few shoppers even in the evening shopping in
the downtown area in front of the US base in the city of Misawa
in Aomori Prefecture, where the local residents suffer from the
noise of US aircraft. Many shops in the one-kilometer-long
shopping street have closed their shutters.

In addition to the continued business slump, the reason is
because many people go to large-scale retail shops built in the
suburbs of Misawa City.

As part of fiscal reconstruction, Prime Minister Koizumi has
drastically cut public works projects since he assumed office.
Koizumi's fiscal reconstruction drive has hit hard Aomori, a
prefecture whose economy greatly depends on public projects.

The budget for public works projects for fiscal 2006 in that
prefecture is only 55%of what it was in 2001 when Koizumi assumed
office. Another serious problem is the drop in the number of
private housing starts, including condominiums.

The regional economic slump greatly affects employment. Aomori
Prefecture's active job opening to applicant ratio for 2005 was
0.40, marking the lowest rate across the country for four years
in a row. There are obvious gaps with the large cities such as
the urbanized Aichi Prefecture's 1.67, and Tokyo's 1.38. Aomori's
jobless rate was highest for three consecutive years until last

The Koizumi government has promoted the so-called "trinity
reform" that would rearrange the taxation and fiscal relations
between the central and local governments. Regional areas where
there are a few large companies, however, have suffered from a
reduction in state subsidies.

The government has reduced its subsidies to Aomori Prefecture by
37.6 billion yen over the past three years starting in fiscal

2004. Therefore, the budgets for commerce and industry and
agriculture-forestry-fisheries industries were drastically cut.
The prefecture was able to use freely only 400 million yen in tax

While large cities enjoy prosperity, regional areas are suffering
even worse than ever from the economic slump.

(5) USFJ realignment: Japan should not flinch from negotiating
relocation cost

ASAHI (Page 15) (Full)
March 25, 2006

TOKYO 00001616 009 OF 016

Kazuhisa Ogawa, military analyst

Japan and the United States are now about to enter into the final
phase of intergovernmental coordination over the realignment of
US forces in Japan. One of the major issues pending in the talks
is where to relocate the heliport functions of the US Marine
Corps' Futenma airfield in Okinawa Prefecture. Another big issue
is how to share the cost of moving US Marines from Okinawa to
Guam. Senior officials from the Japanese and US governments met
early this month. On that occasion, the United States asked Japan
to pay 75% of the Guam relocation cost estimated at 10 billion
dollars, or approximately 1.18 trillion yen, in order for the
Okinawa-based US Marines to move 8,000 troops. However, the
Japanese government deemed it impossible to foot such a bill in a
March 16 meeting of cabinet ministers. All eyes are now on h,Q_Qu#BjT^9Qj9!Xfan to shoulder an appropriate burden for it was Japan that
first proposed alleviating Okinawa's burden of hosting US
military bases, while securing its alliance with the United

In April 1996, the Japanese and US governments reached an
agreement to return Futenma airfield. Since then, I have
suggested the need for the Japanese government to resolve other
US military base issues in Okinawa and work out a package of
drastic economic stimulus measures for Okinawa's self-
sustainability. In Okinawa, the presence of US Marine ground
troops has been the object of local resentment. I have advocated
readying them in the rear for rapid deployment instead of
stationing them on that island prefecture, while thinking to
myself that Japan should pay for it in an appropriate way. Their
transferal to Guam is based on a similar idea.

Even so, what if Japan refuses Uncle Sam? That's always been a
matter of primary concern to Tokyo. Japanese government officials
might be thinking to themselves that in that case, the United
States might even abrogate its security treaty with Japan. If
they negotiate with their US counterparts while thinking that
way, Japan would have to pay as much money as the United States
wants. There's no doubt that the talks will be settled with the
United States making some concessions. However, if Japan
underlines its national interests based on objective views as
noted below, it should be possible for Japan to hold down its
cost sharing to below 50%. Japan's diplomatic skills will now be
truly tested.

Even among US allies, Japan is situated in the most strategically
important place. Washington has always feared that Tokyo might
call off the bilateral alliance. In fact, the United States has
always been worried about Japanese sensitivities every time there
has been a crime or an accident involving US military personnel.
It's a far cry from its attitude toward other allies in similar
incidents. Japan has become even more important in the US
military's global transformation intended to deal with newly
emerging threats following the 9-11 terrorist attacks.

Aside from how to interpret the scope of the Far East described
in the Japan-US Security Treaty, the Japanese archipelago has
capabilities to back up US military operations in the hemisphere
ranging from Hawaii to the Cape of Good Hope on the southern
extremity of Africa, and it forms a strategic base like the bases

TOKYO 00001616 010 OF 016

on the US mainland. The Japanese people currently shoulder an
annual burden of approximately 600 billion yen for the stationing
of US forces in Japan, including 240 billion yen from its
omoiyari yosan or literally "sympathy budget" slot. This host
nation support financially buttresses the US forces in Japan.

However, there is an even more important factor for the United
States. Japan is the only country that can provide strategic
bases in this hemisphere. US forces deploying on a massive scale
in this sphere are equipped with state-of-the-art weapons. Only a
country with industrial, technological, and financial power at
the same level with the United States can support their presence
and can remain a strategic linchpin for them in the region. There
can be no country but Japan to meet that requirement.

In the event Japan calls off the alliance, the United States,
which cannot expect to secure any alternatives for its strategic
bases in Japan, would lose about 80% of its power projection
capabilities. If so, the United States can no longer remain the
only superpower. Russia and China wouldn't comply with the United
States. Eventually, the United States will be just a lonely big

Indeed, Japan has much to lose should it dissolve the alliance.
In this case, Japan would need to make up for the US military
presence with its own military capabilities. To do so, Japan will
have to spend a huge amount of money. Furthermore, such an option
is even likely to result in isolating Japan in the international
community. However, the United States will lose much more and can
no longer remain the world leader. Based on this objective
perspective, Japan should display its diplomatic strength without
flinching and should set forth its own standpoints.

(6) Iwakuni and Okinawa plebiscites exhibited need for government
to offer explanations fairly and squarely; Sources of distrust
must not be expanded

MAINICHI (Page 7) (Abridged slightly)
March 22, 2006

By Nakae Ueno, Mainichi Shimbun Western News Department

Iwakuni City, Yamaguchi Prefecture, conducted a plebiscite on
March 12 in which 87% of the voters, or 51% of all the eligible
voters, said "no" to a plan to relocate US carrier-borne aircraft
to the US Marine Corps' Iwakuni Air Station in the city. Seeing
the results, I said to myself, "Will the local residents be let
down for the third time?" I have covered Nago, Okinawa
Prefecture, and Iwakuni since Tokyo and Washington adopted last
October an interim report on the realignment of US forces in
Japan. I strongly feel that if the government intends to push
ahead with US force realignment believing that the Japan-US
security system has entered a new age, it needs to spell out why
such is necessary to the people openly and squarely.

Prior to the Iwakuni poll, two local plebiscites took place in
Japan: one in 1996 in Okinawa over the propriety to realign and
downsize bases in the prefecture, and another one in 1997 in Nago
over whether to approve the construction of an alternate heliport
for Futenma Air Station. In both cases, residents said "no" to
the US bases. But immediately after the prefectural referendum,
then Okinawa Gov. Masahide Ota refused the prime minister's order
to sign papers necessary to force landowners in the prefecture to

TOKYO 00001616 011 OF 016

continue to lease land to the US military. Then Nago Mayor
Tetsuya Higa also announced shortly after the local poll that his
city would accept the construction of the heliport. Their steps
drew criticism as conflicting with the popular will.

I got a hunch from then Iwakuni Mayor Katsusuke Ihara's four
press conferences that the local residents would be "betrayed"
for the third time. Ihara's statements lacked coherence. He
described the plebiscite as a golden opportunity for Iwakuni to
determine its future course, while indicating that the
responsibility for national defense rested with the central
government. Asked if Ihara would be able to negotiate with the
central government during his term of office, he simply said, "I
will convey local views to the central government."

Ihara resigned from office on March 19, the day before Iwakuni's
merger with seven neighboring municipalities. Whether to accept
the carrier-borne unit has been a campaign issue for the April 23
mayoral election for the new city. Until then, no one will be in
charge of talks with the central government. Tokyo intends to
produce a US force realignment final report by the end of this
month. In other words, Iwakuni's popular will for a dialogue with
the central government would be left up in the air. What was the
Iwakuni plebiscite all about?

It is undeniable, however, that the two previous plebiscites
prevented the base issue, as symbolized by the Futenma
relocation, from moving forward.

In that context, I find Ihara's strategy somewhat agreeable.
Ihara, an opponent of the relocation plan, proposed the
plebiscite to challenge business circles, which were eager to
accept the relocation plan in anticipation of a hefty economic
revitalization package from the government. Ihara continued to
urge residents to go to the polls knowing that chances for
rejecting the relocation would grow with voter turnout in excess
of 50 percent.

The Iwakuni Chamber of Commerce and Industry (ICCI) led by
Tokumitsu Sasagawa adopted a resolution to entice some Atsugi
base functions to the city conditioned on the construction of an
additional runway and other factors last June when Iwakuni, the
city assembly, and the seven neighboring municipalities were in
agreement to block the relocation.

An ICCI executive blamed then ICCI President Sasagawa's ambition.

In his New Year statement last year, Sasagawa painted a rosy
picture with Okinawa in mind, saying Iwakuni would benefit
tremendously from its acceptance of carrier-borne jets. The
government provided Nago and other municipalities in the northern
part of Okinawa with economic stimulus measures in return for
accepting the alternate facility for Futenma Air Station. But the
efficacy of such measures is not clear. One local head noted,
"The Okinawa Summit was held, and there were many other projects,
but all those were short-lived, like a flash in the pan."

Job-creating US bases can be helpful to revitalize local
economies on one hand, and they could also dampen local
communities' independent efforts to foster industries on the
other. The US military's strict restrictions on the height of
smokestacks and other facilities have driven major plants away
from the Iwakuni area. A strong sense of lost earnings is looming

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over Iwakuni, where people do not get any military land rent in
stark contrast to Okinawa.

It is easy for the central government to dismiss the outcome of
the Iwakuni poll as regional arrogance. But the government should
give thought to the weight the 51% of the eligible voters
carries. I believe many people feel uneasy about being embroiled
in the realignment of US forces in Japan that is said to reflect
qualitative change in the Japan-US security system. They also
resent being exposed to greater noise levels.

A man in his 60s who accepts the relocation plan commented, "The
plebiscite has awakened those citizens who may have had doubts
about the existence of the base."

If the central government firmly believes that US force
realignment is necessary for the future of Japan, it should
explain its reasons sincerely without taking advantage of local
expectations for economic packages. Otherwise, sources of
distrust in the Japan-US security system would spread across

(7) Beef imports from Mexico, China gradually increasing, though
BSE risk remains unknown

SANKEI (Page 5) (Excerpts)
March 28, 2006

Mexican and Chinese beef imports have gradually been increasing
recently. In these countries, even a single case of BSE has not
been discovered. Some experts, though, warn that the BSE risk of
Mexican beef is as high as American beef. Japan has imported far
smaller volumes of beef from Mexico and China than imports from
Australia, but restaurant chains have begun to use beef imported
from the two countries. Japan and the US are scheduled to hold
their expert talks this week on the recent incident in which a
specified risk material (SRM) was found in a US veal shipment to
Japan. Isn't there any blind spot in the safety measures our
nation has taken to prevent BSE at the water's edge?

Japan imported about 460,000 tons of beef in 2005, of which
410,000 tons came from Australia, accounting for 90% of all.
Those from Australia and New Zealand make up 98%.

In 2003, when the first case of BSE was found in the US, Japan
imported 0.2 tons of beef from Mexico. As the ban on US beef
imports has dragged on, however, the volume increased to 1,800
tons in 2004 and 6,700 tons in 2005. This figure is 30,000 times
larger than the 0.2 tons. The volume of imports from China also
grew from 17 tons in 2003 to 27 tons in 2005.

An industry source made the following analysis on the increase of
Mexican beef imports: "there certainly is the aspect of covering
the drops in imports from the US, but the taste of Mexican beef
is similar to American beef."

Japan has attached the condition of removing SRMs but no
threshold age for importing beef from Mexico and China, taking
into consideration the fact that no case of BSE has been reported

But a prion panel member has begun to suggest: "Mexico and the US
are connected by land, so the BSE risk of Mexican beef, like

TOKYO 00001616 013 OF 016

American and Canadian beef, should not be disregarded."

Immediately after the first case of BSE was announced in the US,
the US Department of Agriculture set up a team of experts from
Britain, Switzerland, New Zealand, and other countries to examine
its safeguard measures. The international survey team issued a
report with unexpectedly severe comments: "It is impossible to
draw a line between contaminated districts and clean districts in
the North American area. It is necessary to work out measures
that cover all the member countries of the North America Free
Trade Agreement (NAFTA), including Mexico." A survey team of
Minshuto (Democratic Party of Japan) members also noted in its
report: "About 900,000 head of cattle, beef, and animal feed have
been traded annually between the US and Mexico."

As if to prove this, beef with the label bearing the mark
"produced in America" was found in a shipment from Mexico to
South Korea in July 2004. Following this, South Korea banned beef
imports from Mexico.

Regarding Chinese beef, as well, there are many uncertain
factors. According to the international survey team, meat-and-
bone meal that had been produced in large quantities in the US
until the first case of BSE was confirmed was exported to China,
Southeast Asia, and Latin America. Another expert commented: "A
BSE-infected case could be discovered anytime in China."

Japan requires all cows for human consumption to be tested. The
US has increased the number of cattle subject to inspection to
670,000 since June 2004. The number of inspected cows was about
3,500 in Mexico and about 3,500 in China both in 2004. A virus
expert said: "(The two countries) are negative about disclosing
information on infection diseases. The countries are black

The Cabinet Office's Food Safety Commission (FSC) will launch a
country-specific BSE risk survey. Some give a warning
particularly about Mexico and China, a member remarking: "No case
of BSE has been reported, but there may be cattle infected with
the diseased." Reflecting such a view, a prion panel - chaired by
Yasuhiro Yoshikawa - will collect data related to production,
inspection, and distribution, and will examine to see the safety
of Mexican and Chinese beef.

Since each nation has a different inspection system, it is
difficult to compare the BSE risk of their beef in an objective

When Japan resumed US beef imports, Japan attached the conditions
of importing only beef from cattle 20 months of age or younger
and removing all SMRs. For Mexican beef, Japan attaches only the
SMR-removal condition. A survey team member said: "The risk of
Mexican beef is higher than American beef." Restaurant chains
have begun to use Mexican or Chinese beef, keeping in mind the
risk of BSE infection of US beef. Focusing on this recent trend,
Chairman Yoshikawa said: "We must not ignore BSE risk on humans."

In assessing BSE risk, the FSC needs to obtain data from the
countries concerned, but it is uncertain whether Mexico and China
will respond to its call, although the US and Canada positively
responded in hopes of resuming exports.

An expert panel member was overheard saying: "It would be

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impossible to make assessments due to a lack of data. Whether to
continue imports (from Mexico and China) even under such a
situation will be decided not by scientists but by the government
in charge of risk management." Another member, though, called for
caution, remarking: "If the risk of BSE remains unknown, it is
rational to suspend imports."

An Agriculture, Forestry and Fisheries Ministry source said: "It
is difficult to ban imports under international rules only for
the reason of there being suspicions."

Given this, the government has required meat-processing plants in
Mexico to submit the certificates of origin and has conducted
sampling tests on more than 5% of imported beef from cattle grown
in Mexico and carrying rough records.

Restaurant chains that use Mexican and Chinese beef are calling
on the government to strengthen its quarantine system. A member
of the Japan Food Service Association commented: "It will be
impossible to assess BSE risk because (Mexico and China) are
unlikely to provide data. It is essential for the government to
thoroughly manage bilateral trade."

A restaurant industry source familiar with meat-eating habits in
North America assailed:

"US has invested capital and technology in the Mexican cattle
industry, but the money and technology have not necessarily
reached the processes of production, processing, and
distribution. ... It is more important for the government to
strengthen coastal examinations, instead of adding fuel to public
concern and distrust by making a fuss, only out of scientists'
curiosity and without confirming if such assertions are true or

(8) BSE risk: Structural defects found in US inspection system;
Safety procedures must be observed to reduce BSE risk

SANKEI (Page 7) (Slightly abridged)
March 26, 2006

Question by a female reader in Kanagawa Prefecture:

Case after case of BSE infection among Japanese cattle has been
discovered here. If Japan resumes US beef imports again, is the
BSE risk higher in the US product than that in Japanese beef?
Should a person eat beef from a BSE-infected cow contract the
Variant Creutzfeldt-Jakob Disease (vCJD), who will assume the


Both humans and animals can be infected with BSE. Should a person
eat specified risk materials (SRM), such as the brain and spinal
cord, from infected cattle, that person will die of vCJD after
showing typical clinical symptoms, such as the spongy appearance
of the brain tissue, disturbance in perception, and walking
difficulty. As of now, 169 cases of vCJD have been reported
across the world. Of them, 154 cases occurred in Britain. In
Japan, the first patient of this disease was confirmed in 2005.
It was learned that the patient (who died in 2004) had been in
Britain for about one month around 1989. He is considered to have
contacted the disease in that country.

TOKYO 00001616 015 OF 016

Though vCJD is a dreadful disease, it might not be necessary to
become excessively concerned about catching that disease. The
Cabinet Office's Food Safety Commission (FSC) estimates that vCJD
is extremely rare, and a simulation predicts that one person or
less in Japan might have picked up the disease from eating
domestic beef.

Scientific assessment difficult

Is there any difference in the level of BSE risk between American
and Japanese beef?

The Agriculture, Forestry, Fisheries Ministry (MAFF) and the
Health, Labor and Welfare Ministry (MHLW) asked the FSC in May
2005 to make equivalence assessments of the BSE risk of US and
Japanese beef. As a result, the government set the following
conditions for Japan to resume US beef imports: (1) only beef
from calves 20 months of age or younger should be imported; (2)
Japan's SRM standards should be adopted, although the US has
different standards.

The prion expert study group (chaired by Yasuhiro Yoshikawa) has
finalized a report of recommendations. The report noted that
since much remains unknown about the quality and volume of data
on US beef, "it is difficult to make scientific equivalent
assessments." But it concluded that as long as the conditions
were met, "the difference in the levels of BSE risk of Japanese
and US beef is small."

The panel gives this explanation: Even if a cow younger than 20
months of age is infected with BSE, only a small amount of agents
causing the disease are accumulated in it; so under the current
inspection method, the cow will test negative. There is also no
possibility of the disease being contracted even if one eats
meat. It concluded that as long as SRM are properly removed in
the slaughtering process; imported beef will have little BSE risk
on humans.

This means the risk of US beef imported to Japan based on severe
import conditions is far smaller than that of beef consumed in
the US, and the risk of imported beef is almost the same level as
that of domestic beef.

Based on this view, Chairman Yoshikawa stated: "Should a person
who has never left Japan ate American beef and then developed the
disease, the responsibility would rest with those who assessed
the risk of US beef." He thus referred to the responsibility of
the expert panel if the case of vCJD is found in Japan.
Yoshikawa, though, added: "It is inconceivable that such a case
will happen."

Separated process necessary

Japan reinstated its ban on US beef imports, following the
discovery of vertebral columns in a US veal shipment to Japan
this January. Bones were also found in a shipment to Hong Kong in

The meat-processing facility that shipped the banned material to
Hong Kong had cleared Japanese government inspection. This
incident posed questions on not only the US management system but
also Japan's inspection system.

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In response to the US violations in its beef shipments, Chairman
Yoshikawa commented coldly: "These incidents are apparently the
United States' unilateral violations of our contract that are on
a different level from risk assessments by scientists. I am
dumbfounded by such incidents, rather than feeling outrage."

Some point out that behind the United States' ineligible
shipments, there are faults in its processing system. In
exporting beef to Japan, American plants have to carry out meat
processing based on both Japanese and American. Cattle 30 months
of age or younger are separated from other cattle first. Later,
cattle 20 months of age bound for Japan are separated from them.
In addition, Japan and the US have adopted different SRM

Based on the view that many mistakes will unavoidably be made
under such a processing system, Yoshikawa has proposed these
preventive measures to be taken by the US: (1) The process of
cattle bound for Japan and that for the US should be separated;
and (2) Japan should reopen its market only to beef produced at
facilities authorized by Japanese inspectors.

Yoshikawa added: "Exercising the right to choose beef upon seeing
country-of-origin markings is also one of the risk assessments."