DAILY SUMMARY OF JAPANESE PRESS 03/29/06

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SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 03/29/06


INDEX:
(1) Okinawa problem yet to be dissolved; It's time for premier to
break the ice

(2) Focus on whether Mori faction will field single candidate
for LDP presidential race

(3) Former Prime Minister Mori remains silent as to whether he
supports Abe or Fukuda, concerned about bringing out the jealousy
of other factions

(4) Polarizing Japan (Part 1): People unable to feel the
economic recovery

(5) Editorial: Integrated command of SDF - Reform needed to break
sectionalism

(6) Prime Minister's daily schedule

(7) (Corrected copy) Household assets decrease 11% over five
years, according to survey by Internal Affairs Ministry

ARTICLES:
(1) Okinawa problem yet to be dissolved; It's time for premier to
break the ice

ASAHI (Page 13) (Full)
March 28, 2006

Hiroshi Hoshi, senior writer

There's an unfamiliar post officially titled "Ambassador
Extraordinary and Plenipotentiary for Okinawa" or "Okinawa
Ambassador" for short. The post was established in 1997 for the
role of bridging the Japanese government and Okinawa over US
military base issues. Toshinori Shigeie was appointed to fill the
post of Okinawa ambassador this month, becoming the sixth
incumbent. Shigeie is now busy making a round of courtesy calls
in Okinawa Prefecture. Many of his shipments have yet to arrive
in Japan from South Africa, where he was previously posted.

In Okinawa, Shigeie paid courtesy calls on a number of local
authorities and business leaders. On such occasions, they would
never fail to ask the Japanese government to make efforts in
earnest to reduce US military bases. The atmosphere would then
tend to become standoffish. But even then, Shigeie could break
the ice in a moment. That would be when Shigeie introduced
himself by saying, "I was once a secretary to Chief Cabinet
Secretary Keizo Obuchi during the Takeshita cabinet." Then, most

SIPDIS
of his meeting counterparts smiled with this reaction: "Oh, Mr.
Obuchi? That's good."

Obuchi visited Okinawa when he was a student at Waseda
University. Since then, Obuchi long worked for Okinawa's return
to Japan and later took part in its economic development. When
Obuchi was prime minister, he made up his mind to host the 2000 G-
8 summit in Okinawa. Obuchi's popularity stands out in Okinawa
probably because the residents of that island prefecture know
what he had on his mind.

I had an opportunity to interview Obuchi when he was prime
minister.


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I remember him saying things like this: If Okinawa hosts the G-8
summit, its base problems would raise concerns not only in Japan
but also in the United States. Okinawa accounts for only 0.6% of
Japan but is home to 75% of all US military bases in Japan.
There's no end to incidents and accidents involving US military
personnel. People would realize that we've got to do something
about Okinawa's excessive burden, and there would be a rise of
such public opinion in and outside Japan. In response, the United
States would reduce its military presence on the island. Japan
would take over some base functions at its mainland locations.
I'm thinking of asking Okinawa to remain patient for a while.
That's the very best way to share the pain among the three
parties...

"Japan has enjoyed peace and prosperity under its security
arrangements with the United States," Obuchi told me. "We must
not force that burden on Okinawa alone," he added. He also said,
"We must equalize benefits and burdens not only in the area of
social security but also in the area of national security, and
that's a political role."

Obuchi later collapsed with a stroke, never to host the Okinawa
summit and never to see any base reductions.

And now, Japan and the United States are in the final phase of
talks over the realignment of US forces in Japan. The Japanese
and US governments are about to push ahead with their planned
relocation of Futenma airfield-a symbol of the US military
presence in Okinawa-to the island's coastal area in defiance of
local outcries. There is also an idea being floated from within
the government to make an ad hoc law in order for the government
to transfer the governor's land reclamation clearing authority to
the state and push for construction work. The government is
projecting such a strong attitude in order to press Okinawa to
give in.

"If we try to force our way through, we'll only bring about
strong backlashes. Prime Minister Obuchi took the time to listen
to local voices. But now, things have changed in our way of
getting along with Okinawa." This grumbling came from a
government official engaged in Japan-US relations.

In the meantime, the United States has now concurred on
relocating some of the Okinawa-based US Marine troops to Guam.
The US government estimates the total cost of this Guam
relocation at approximately 10 billion dollars or 1.16 trillion
yen and asked the Japanese government to pay about 7.5 billion
dollars or 870 billion yen.

Should Japan reject any cost-sharing proposal, the Pentagon may
substantially downscale the Marine relocation plan. It wouldn't
cost so much money to move and base those troops somewhere else
in Japan. In that case, however, those troops would not be
welcomed anywhere in Japan. Instead, it has become a realistic
option for Japan to bargain with the United States for cost
sharing... Most of the government and the ruling parties have the
same outlook.

This time around, Prime Minister Koizumi-the top leader in charge
of Japan's foreign and defense policies-should make the first
move to break the ice on Okinawa's problems.

If he did, Japan would tenaciously call on the United States to

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realize Okinawa's actual circumstances. The prime minister would
persuade the mainland population to understand that government
spending is unavoidable if they cannot take over Okinawa's base-
hosting burden. He would ask Okinawa to remain patient for a
while. Instead, he would promise to alleviate Okinawa's base-
hosting burden in the future. That's the way I would like him to
commit himself with his own words to Okinawa's base issues.
Actually, however, Koizumi cares little about Okinawa's base
issues unlike his initiative to carry out postal privatization,
according to one of the ruling Liberal Democratic Party's
executive officers.

On May 11, the seventh anniversary of Obuchi's death will be
remembered. Time has passed, but the Okinawa problem remains as
unresolved as ever.

(2) Focus on whether Mori faction will field single candidate
for LDP presidential race;

MAINICHI (Page 1) (Slightly abridged)
March 28, 3006

With the passage of the fiscal 2006 budget (general account of
totaling 79.686 trillion yen) on March 27 after the House of
Councillors approved it, the Liberal Democratic Party (LDP) will
start moving full-scale in preparing for the September party
presidential election to determine a successor to Prime Minister
Junichiro Koizumi, who is also president of the LDP. The main
focus of attention will be on whether the Mori faction will be
able to field only one candidate for the presidential race, since
it has two possible candidates -- Chief Cabinet Secretary Shinzo
Abe and Yasuo Fukuda, a former chief cabinet secretary.
Meanwhile, Foreign Minister Taro Aso and Finance Minister
Sadakazu Tanigaki will move fast, too, in their preparations to
enter the party leadership race.

Largest faction is quaking

A reporter at a press conference on March 27 asked Abe his
impression of having secured the highest support rate in an
opinion poll deeming him the most suitable person to succeed
Koizumi as the next prime minister. Abe only responded, "As a
politician, I feel very honored."

A senior Mori faction member, however, advised Abe to refrain
from playing up his political identity in order to avoid
objections from veteran lawmakers who do not want to see a
generational change now. However, many young LDP lawmakers are
calling for Abe to become the next prime minister.

If Abe runs in the presidential election backed by junior and mid-
level lawmakers, veteran lawmakers would field Fukuda in the
race. Faction head Mori is strongly concerned that such moves
would likely lead to a factional split and a generational clash.
Mori is even looking into the possibility of changing the name of
the faction to the Fukuda faction should Abe be chosen as a
candidate in a bid to avoid a generational clash that would split
the faction, according to a senior faction member. There is
concern that if Koizumi nominates his successor, the faction's
response would fall behind the curve.

There is in fact a move to tighten the noose around Abe with an
eye on his candidacy. Former LDP Vice President Taku Yamasaki and

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former Secretary General Koichi Kato have expressed sympathy for
Fukuda. "Both Mr. Makoto Koga and Mr. Bunmei Ibuki would support
Mr. Fukuda," said a senior Mori faction member.

Income disparity and Asia

There is a sharp contrast between Abe and Fukuda in the approach
to Asia diplomacy. Abe takes a hard-line policy toward China,
supporting Koizumi's visits to Yasukuni Shrine. Fukuda, however,
stresses the need for changing Koizumi's policy line toward
China, noting Japan's responsibility for the past war.

Aso and Tanigaki plan to release their campaign pledges in May
and June separately. All the more because the two are far behind
Abe and Fukuda in the polls, they are now being forced to display
their own political identities. Tanigaki is not trying to draw a
line with Koizumi, placing emphasis on the need for fiscal
reconstruction and halting the widening social disparity. Aso is
playing up his capabilities to the public by stating that the
Emperor should visit Yasukuni Shrine and by calling Taiwan a
country.

Prime Minister Koizumi stated in a press conference on March 27
that he wanted his successor to push ahead with the reform drive
by following the path created by the Koizumi cabinet. He added,
"I hope that a person who armed with a sense of mission, insight,
and passion will become my replacement."

(3) Former Prime Minister Mori remains silent as to whether he
supports Abe or Fukuda, concerned about bringing out the jealousy
of other factions

TOKYO SHIMBUN (Page 2) (Abridged slightly)
March 29, 2006

All eyes are now being focused on moves of former Prime Minister
Yoshiro Mori, who heads the largest faction in the Liberal
Democratic Party (LDP),to which potential successors to Prime
Minister Junichiro Koizumi -- incumbent Chief Cabinet Secretary
Shinzo Abe and former Chief Cabinet Secretary Yasuo Fukuda --
belong. Mori has forbid his faction members from mentioning the
post-Koizumi candidate matter. He has remained cautious about his
remarks even in Moscow, where he is now visiting. What is the
real reason for his attitude?

Mori told reporters accompanying him to Moscow on March 28, "Our
group (Mori faction) should not take any action since neither Mr.
Abe nor Mr. Fukuda have said that they will run (in the LDP
presidential race)." In his remarks, Mori called on his faction
members for restraint.

Mori has urged faction members to be cautious in their remarks.
He especially demanded that aides to Abe, who is regarded as most
likely successor to Koizumi, abstain from hasty action. He has
reiterated that Abe should wait for the next chance, skipping the
September leadership race. He assumes that if Abe becomes prime
minister, his term in office will be short since the LDP may face
an uphill battle in next summer's House of Councillors election.

Mori is, however, worried that if Abe obtains the LDP's top post,
factional balance might be undermined. If junior members support
Abe, mid-level and veteran lawmakers would be unhappy. In order
to avoid such a situation, Mori cautioned young lawmakers about

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calls for Abe to become the next prime minister.

Mori told Fukuda that business leaders pinned their hopes on him,
implying his support for Fukuda. This is Mori's hidden motive of
wanting to keep factional balance by giving support to Fukuda.
This does not mean that he actually supports Fukuda.

Mori revealed yesterday another reason for his cautious remarks
about the presidential race, saying, "I do not know whether other
factions agree to an idea that the next government will again be
led by a member of our faction, following me and Mr. Koizumi." He
is concerned that if the next prime minister is chosen from his
faction, such will create jealousy among the other factions.

Of course, Koizumi's successor will not be decided by Mori's view
alone. However, Mori's remark is important since LDP Upper House
Chairman Mikio Aoki said, "If Prime Minister Junichiro Koizumi
and Mr. Mori talk about the issue, they will set the direction."

(4) Polarizing Japan (Part 1): People unable to feel the
economic recovery

ASAHI (Page 1) (Abridged)
March 29, 2006

In the March 24 Upper House Budget Committee session, Prime
Minister Junichiro Koizumi said proudly, "There may be are all
sorts of strains in it, but our society has never been this
prosperous." Koizumi was responding to a Minshuto (Democratic
Party of Japan) lawmaker, who asked on behalf of those people who
think that income and regional economic disparities are growing,
"Is that what you wanted for Japan?"

The ongoing economic expansion that started in February 2002 will
be the longest in the postwar period if it surpasses the economic
bubble (Dec.1986 - Feb. 1991) this May and the Izanagi boom (Nov.
1965 - July 1970) in November. Koizumi's confidence comes from an
envisaged declaration that Japan has overcome deflation.

In late January, Koizumi said, "Growing social disparity has not
been confirmed." Hearing this, ruling party executives ridiculed
Koizumi for his ignorance of the nation's concern.

Putting forward his logic that the strong would be able to
protect the weak, the prime minister has eased labor regulations
and put the scalpel to skyrocketing social security spending, all
in the name of the Koizumi reform drive. In the prime minister's
defense, Internal Affairs and Communications Minister Heizo
Takenaka and LDP Policy Research Council Chairman Hidenao
Nakagawa kept making supportive comments, such as, "Economic
development is the best medicine for correcting social
disparity," and, "The results of reforms will bring about
economic growth."

Encouraged by their assistance, Koizumi declared before the Lower
House Budget Committee in late February: "Japan is potentially
capable of achieving far greater than today's economic growth,
which is still low. We will continue with reforms."

Less fulltime jobs, no savings

Will the majority of the people be able to actually feel
affluence if the ongoing economic recovery continues and fear

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about the growing disparity subsides as a result? A comparison of
various data warrants no optimism.

Corporate profits, mostly those of large firms, have set new
records, while disposable household incomes have decreased. The
number of salaried workers making over 20 million yen annually
increased 18,000 between 2000 and 2004, according to the National
Tax Agency. At the same time, the number of people earning less
than 3 million yen also increased 1.6 million during that period.
During the economic recovery, industries cut back on fulltime
workers and increased low paying part-time jobs. Although the
unemployment rate has dropped, the overall job market has become
unstable.

Disparity in savings also increased. According to Internal
Affairs and Communications Ministry statistics, the average
household savings was 16.92 million yen in 2004, and two-thirds
of all the households were below average. Another poll showed a
sharp increase in the rate of those who said they had no savings.
The number of households on welfare also topped 1 million.

Regional disparities are also noticeable. Shortly after the
establishment of the Koizumi administration, Sapporo's average
household income marked 95 against the base 100 for Tokyo.
Sapporo's figure dropped to 83. The difference had shrunk during
the Izanagi boom and slightly expanded during the economic
bubble. The job-offers-to-seekers ratio also dramatically
improved in Tokyo from 0.68 to 1.58 during the four-year period
in contrast to Hokkaido's slight improvement from 0.47 to 0.66.

Also noteworthy is the seriousness of such problems as the high
unemployment rate for young people, NEET (young people not in
education, employment or training),and job-hopping part-time
workers. Koizumi, who had indicated that disparity was not bad in
itself, has recognized the need to take countermeasures. The
government has been playing up its efforts for resolving such
problems.

Fear of repeating US trend that took toll on young people

Resolving those problems will not be easy.

Less than 60% of the college graduates have found fulltime
employment since 2000. A 36-year-old male Yokohama call center
operator making 1,200 yen an hour described his male part-time
worker-dominated workplace as a "dead end." A 30-year-old man of
Tokyo, a son of a board member of a large corporate group, also
noted, "I may be able to find employment at a company, but it is
smaller and more unstable than my father's corporation."

Koizumi has urged society to give people a second chance. But the
above-mentioned person said, "Once a person leaves the
mainstream, it is extremely difficult to get back on track."

Nakagawa, a dedicated Koizumi supporter, is calling for a rising-
tide economic policy, which is intended to pour personnel, money,
and commodities into growing fields on an extension of structural
reform in order to overcome deflation aimed at a high growth
rate.

In the 1960s, US President John F. Kennedy said, "A rising tide
lifts all boats." But in 1997 at the height of the US economy
under President Clinton, the Council of Economic Advisers

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produced an annual report, which concluded:

"Income disparity shrank during the ten years each before and
after the Kennedy administration. But the trend has changed
drastically since the late 1970s, and the social divide expanded
regardless of economic conditions."

The report also pointed out the difficulty to turn around the
ongoing trend.

How will the Koizumi administration respond to such an alarm?
Nihon University Prof. Yoji Inaba, who is knowledgeable about the
US economy's job recovery, is paying attention to some
similarities between the US of the 1990s, which took a toll on
young people, and today's Japan. He said apprehensively, "If this
situation persists, Japan would repeat the US trend."

(5) Editorial: Integrated command of SDF - Reform needed to break
sectionalism

MAINICHI (Page 5) (Full)
March 29, 2006

The Self-Defense Forces (SDF) came under the joint operation
system of integrating the chain of command starting on March 27.
With the introduction of this system, the previous Joint Staff
Council was scrapped and replaced by the Joint Staff Office
(JSO),an organization that plays a leading part in mobilizing
SDF troops.

This is the first drastic reorganization of the SDF since they
were established in 1954.

The integrated operations are intended for the SDF to engage in
operations swiftly and effectively in the event of emergencies,
for instance, terrorism, contingencies and large-scale disasters.
In the past, the chiefs of each branch of the SDF - Ground, Air,
and Maritime Self-Defense Forces - assisted the Defense Agency
director-general separately and issued orders to their respective
troops. Under the integrated operations, the chain of command is
put in the hand of the chief of JSO. The first chief of JSO, Gen.
Hajime Massaki, bears grave responsibility in this sense.

The three chiefs of staff are no longer involved in troop
operations but instead are responsible for such matters as
personnel matters, budget, education, and training.

Affected by the extensive changes of the international situation,
the duties and missions of the SDF have also changed
significantly. The National Defense Program Guideline stresses
the need for missile defense (MD) programs and defense of remote
islands.
The efficacy of the MD system is determined by a quick action.
This system requires the MSDF's Aegis ships and the ASDF's
intelligence system to be linked to each other so that they can
deal well with contingencies.

If a remote island of Japan were to be occupied by, for example,
terrorists, troops from the three forces must team up under a
landing operation; otherwise Japan could not recover the island.

The transition to the integrated operations is the need of the
times, as evidenced by the military movements of other nations,

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including the United States.

Joint operations and joint disaster prevention drills have been
already carried out. For instance, in order to deal with the
aftermath of the Sumatra Earthquake and Indian Ocean Tsunami,
Japan dispatched a joint unit to the quake-hit area, envisaging
the planned transition to the joint operation system.

However, the three organizations of the SDF have their respective
traditions and cultures. They use different computer software and
radio frequency. The terminologies they use are also different.
The SDF therefore have three hurdles to clear for the
transmission of important intelligence.

The GSDF, MSDF, and ASDF, in view of their good and bad points,
are described below: good preparations and institutional
sclerosis for the GSDF; traditionalist and self-centeredness for
the MSDF; and fortitude and inconsistency for the ASDF. This may
be the result that each organization has fostered its own
culture.

The just established JSO is a motley collection of 500 personnel
from the three forces. If they stick to the usual sense of
sectionalism, it would be difficult to attain the goal of
effective operations. Sour relations between the three forces
and the JSO must not be created. Uniformed officials and
administrative officials (in the Defense Agency (JDA)) need to
build a good relationship.

In the process of promoting the most drastic reorganization ever
since the foundation of the SDF, the JDA saw a succession of
scandals occur, for instance, the Defense Facilities
Administration Agency (DFAA) officials-led bid-rigging cases and
the MSDF officials-caused leakage of secrets via the Internet.

The introduction of the joint operation system may be viewed as
an opportunity to reform the structure of the SDF. Given this, it
is also necessary to reform the SDF, reflecting on those
scandals. We hope to see the SDF, taking advantage of this
opportunity, grapple with various reforms, let alone tackle the
job of changing their troops' previous mentality.

Japan appears to be aiming at boosting its military functions,
but doing so requires politicians to assume a much heavier
responsibility. We again want to emphasize the importance of
civilian control in this transition.

(6) Prime Minister's schedule, March 28

NIHON KEIZAI (Page 2) (Full)
March 29, 2006

09:01Cabinet meeting in the Diet building. Chief Cabinet
Secretary Abe remained.

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09:42Arrived at the Prime Minister's Official Residence.
10:05Met with Deputy Chief Cabinet Secretary Nagase and Assistant
Deputy Chief Cabinet Secretary Saka. Then met with Ambassador to
South Korea Oshima.
11:02Met with Mongolian Prime Minister Enkhbold. Then attended
signing ceremony for yen loans extension.
13:56Met with the Kuwaiti ambassador to Japan.
14:30Met with Ambassador to China Miyamoto, followed by Chairman
Hieda of the National Association of Commercial Broadcasters in

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Japan.
15:23Met with State Minister in charge of Administrative Reform
Chuma and Administrative Reform Promotion Office executive
director Matsuda.
16:05Met with Vice Foreign Minister Yachi, followed by the former
Sudanese ambassador to Japan.
17:24Met with State Minister for Financial Affairs Yosano,
followed by Environment Minister Koike.
18:299Met with Deputy Chief Cabinet Secretary Futahashi.
19:03 Dined at Imperial Hotel with Defense Agency Director
General Nukaga, LDP Security Research Commission Chairman
Yamasaki and Administrative Vice Minister Moriya.
20:39Arrived at the official residence.

(7) (Corrected copy) Household assets decrease 11% over five
years, according to survey by Internal Affairs Ministry

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

The Internal Affairs and Communications Ministry yesterday
released the results of the fact-finding survey on national
consumption the ministry conducts every five years. The total
amount of assets held by one household as of the end of November
2004 was 39 million yen on average, down 11.1% from the previous
survey (1999). The decline in land prices has brought down
residential land equity, which accounts for 56% of all household
assets, by 18.6% and home equity by 2.3%. Financial assets grew
6.1% due to increased savings reflecting the recent economic
recovery.

Classifying all households into 10 groups according to annual
income, the ministry found that the average amount of all assets
held by those in the highest-income group, with an average annual
income of 16.68 million yen, was 81.61 million yen. Families in
the lowest-income group, with an average annual income

of 2.12 million yen, possessed 24.34 million yen in assets on
average, making a 3.4 fold differential in assets between the
groups. The asset differential between the rich and the poor was
5 fold in 1989, when the survey was started. The gap was 3.4 fold
in 1994, and 3.1 fold in 1999, showing a tendency to narrow, but
it widened in the latest survey for the first time.

SCHIEFFER