DAILY SUMMARY OF JAPANESE PRESS 03/31/06

UNCLAS SECTION 01 OF 09 TOKYO 001744

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SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 03/31/06
Part-1
INDEX:


(1) Minshuto executives resign; Nagata quits his Diet seat

(2) Moriya unhappy with Nago City

(3) Nature Conservation Society asks for revision of coastal
plan for Futenma relocation: "Could have an impact on the
ecosystem"

(4) Nukaga refuses Nago proposal on Futenma relocation

(5) 2006 LDP presidential race (Part 1): Shinzo Abe attaches
importance to Constitution and education for rebuilding
conservative visions

(6) Editorial: Muraoka acquitted: Hashimoto's turn to testify
before Diet

(7) Policy debates start in divided Japan (Part 2): LDP fears
fallout from society of disparity

ARTICLES:

(1) Minshuto executives resign; Nagata quits his Diet seat

ASAHI (Internet edition) (Abridged)
March 31, 2006

Minshuto (Democratic Party of Japan) President Seiji Maehara
informed the party leadership today of his intention to resign
his post to take responsibility for the turmoil created by a fake
e-mail message produced by Lower House lawmaker Hisayasu Nagata
(who is now suspended from the party). He hoped to draw a close
to the issue by resigning himself, since the e-mail issue has
become prolonged, and the party cannot stop the losses of public
support in the polls. Other party executives, including
Secretary General Yukio Hatoyama, will also resign their posts.

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The party this afternoon will announce the results of its
investigation into the e-mail issue.

In addition, since a chorus of voices in the party has been
calling for Nagata to quit his Diet seat, Secretary General
Hatoyama reported in a party officials' meeting this afternoon
that "Nagata will resign from the Diet."

At the party officials' meeting, it was decided that an election
to choose a successor to Maehara would not be carried out by
party members but instead, the new party head would be chosen by
election at a joint meeting of Minshuto lawmakers from both
houses of the Diet. Regarding the term in office of the successor
head, the views coming from Diet Affairs Committee Chairman Kozo
Watanabe and others is to make it an interim appointment until
September (when Maehara's term in office would have expired).

On the other hand, in the result of the investigation to be
released by the party later this afternoon, it will be written
that he had told the party leadership and others that he had
exaggerated during questioning in the Lower House Budget
Committee when he acted as if he knew the bank account number
that had been used to send the money (from Livedoor's Horiemon to
the son of Liberal Democratic Party Secretary General Takebe). On
hearing this, Minshuto Secretary General Hatoyama this morning

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met Nagata in Tokyo and asked Nagata to quit the Diet seat on his
own, but Nagata refused.

Maehara explained to Diet Affairs Chairman Watanabe, "Since we
cannot get Nagata to resign on his own, I myself will take
responsibility."

As for a successor, the names of Ichiro Ozawa and Naoto Kan have
been mentioned as contenders to replace Maehara.

(2) Moriya unhappy with Nago City

RYUKYU SHIMPO (Page 2) (Full)
March 31, 2006

(Tokyo) Administrative Deputy Director for Defense Takemasa
Moriya at his regular press conference on March 30 openly
indicated that he was unhappy with Nago City's response that has
led to a delay in restarting talks between the city and the
Defense Agency on the relocation of Futenma Air Station to the
coastal portion of Camp Schwab (coastal plan) as part of the
realignment of US forces in Japan. He said, "The director general
would like to be directly contacted by the mayor." It is
extremely rare for the central government to openly express
dissatisfaction with a local government.

Deputy Director General Moriya explained: "There was a telephone
call from a division chief (in the city hall) to one of our
office workers saying that the mayor wanted to talk with me after
the official funeral of the late mayor Tateo Kishimoto." He
added, "Since the director general (Fukushiro Nukaga) and the
mayor (Yoshikazu Shimabukuro) are engaging in talks, I think the
director general would like to receive a call directly from the
mayor."

In addition, he said, "The last time the two talked, the
conversation ended with him telling the mayor that he wanted to
speak to him again as quickly as possible." He stressed that the
mayor of Nago was supposed to have come on the 29th as promised
at the meeting on the 26th.

(3) Nature Conservation Society asks for revision of coastal
plan for Futenma relocation: "Could have an impact on the
ecosystem"

RYUKYU SHIMPO
March 31, 2006

(Tokyo) In connection with the plan to relocate the US Marines'
Futenma Air Station to the coastal portion of Camp Schwab, Nature
Conservation Society of Japan (Director Sadahisa Tabata) on March
30 sent an opinion paper to Foreign Minister Taro Aso and Defense
Agency Director General Fukushiro Nukaga pointing out the problem
areas with the coastal plan that "would have a major effect on
the living creatures in Oura Bay and on the lives of the
dugongs." The society asked for a revision of the construction of
an alternate facility toward the waters off Henoko. It also asked
in its paper that Governor Keiichi Inamina and Nago Mayor
Yoshikazu Shimabukuro not accept the construction of the current
plan.


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The paper stated: "The shallow waters in front of Camp Schwab is
a good area for sea weed to grow. If the sea is reclaimed and a
man-made runway built, we predict the result would be devastating
for the living creatures in the sea area and the seaweed bed. The
food eaten by dugongs and sea turtles would be lost, and there
would be an impact on the entire ecosystem centered on coral."

In addition, the paper urged that neither the SACO plan nor the
reduced scale plan off of Henoko be built.

(4) Nukaga refuses Nago proposal on Futenma relocation

RYUKYU SHIMPO (Page 1) (Full)
March 31, 2006

TOKYO-Defense Agency Director General Fukushiro Nukaga met with
Kin Town Mayor Tsuyoshi Gibu, Onnason Village Mayor Fumiyasu
Shikiya, Ginozason Village Mayor Hajime Azuma, and Higashison
Village Mayor Shigeru Miyagi at the Defense Agency yesterday
evening. In the meeting, Nukaga asked for their understanding on
the planned relocation of the US Marine Corps' Futenma Air
Station to a coastal area of Camp Schwab in the Okinawa
prefectural city of Nago. Nukaga also told the local chiefs that
the Defense Agency couldn't accept Nago Mayor Yoshikazu
Shimabukuro's counterproposal on the Futenma relocation. The
mayor has called for the agency to avoid setting the flight
course of US warplanes over his city's shore areas and move down
the planned facility's tarmac to an offshore area. The municipal
heads asked the defense chief to talk sincerely with the Nago
mayor. Ginozason Mayor Higashi asked the agency to avoid setting
the flight course over his village's communities.

In the meeting, Nukaga conveyed the Defense Agency's basic stance
to the local authorities. "We can't get a perfect score, so I
will talk with them sincerely," Nukaga said.

"My village also will be greatly affected," Ginozason Mayor
Higashi said. "All of my village's communities are opposed to the
new base, and we don't want US warplanes to fly over our
communities," Higashi added. "If we settle this problem over
here, then we will have another problem over there," Nukaga
answered, adding: "We'd like to have an opportunity for us all to
talk, and then I'd like to consider."

After the meeting, Nukaga said Nago City would hold a funeral
service for the late former Nago Mayor Tateo Kishimoto on April

2. "After that, I hope we can hold talks at an early date with
Nago Mayor Shimabukuro," Nukaga said. At the same time, Nukaga
also said he had held talks with the Nago mayor over the
telephone. The Nago mayor answered he would meet with the defense
chief at the earliest possible time, Nukaga said.

After the meeting, Mayor Gibu said, "We didn't break off." Gibu
also said he would let Nago Mayor Shimabukuro know what they
discussed in the meeting with the defense chief. "We'd like to
talk about what to do about this matter, and I will ask him to
continue talks with the government," Gibu added. He hinted that
he did not definitely oppose the coastal relocation plan in the
meeting.

(5) 2006 LDP presidential race (Part 1): Shinzo Abe attaches

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importance to Constitution and education for rebuilding
conservative visions

ASAHI (Page 4) (Abridged slightly)
March 31, 2006

Since late last year, Chief Cabinet Secretary Shinzo Abe has been
recommending the Japanese movie Always Sanchome no Yuhi (Sunset
on the Third Street) to people around him. The film, a box office
hit, is an ensemble of various human dramas that unfold in one
quarter of Tokyo in 1958 when Tokyo Tower was still under
construction.

In 1958, Abe was 4 and his grandfather Nobusuke Kishi was prime
minister. Two years later, the US-Japan Security Treaty was
revised, dividing the country.

Why is Abe drawn to that time period? A hint may lie in Abe's
"policy speech" posted on the Internet for the virtual LDP
presidential race conducted in December 1999 by the party's like-
minded junior members. The speech read:

"In my boyhood, Japan was still poor, and a lot of Japanese
people craved for catching up with the high living standards of
the United States, which we saw through television and movies. A
half-century has passed since the end of the war, and Japan has
generally achieved that goal. But I am afraid that Japanese
people have become too self-centered."

When the LDP was launched half a century ago, it had two
objectives: (1) creating a prosperous Japan, and (2) establishing
a constitution and a basic education law on its own. Abe
maintains that the first objective has been achieved but the
second one has been put on the backburner. He thinks that
although Japan has grown economically, it has yet to rebuild its
own visions, including a new constitution. Asked about the
Livedoor scandal, which exposed the negative side of the Koizumi
reform drive, Abe said, "We must teach children that there are
values that are more important than winning or losing." The
comment reflected Abe's eagerness to revise the Basic Education
Law. Abe, who learned an "unwavering belief" from Kishi, regards
a post- Koizumi era as a turning point of postwar conservative
politics comparable to the Kishi period.

In the book titled Watashi ga Sori ni Nattara (When I Become
Prime Minister),authored by 29 junior lawmakers and published in
2002, Abe wrote: "My goal is to make Japan into a country with
pride - a country with quiet pride in its history and culture."

Two securities

As means to realize a "country with pride," Abe, since his first
election to the Diet in 1993, has been focusing on two
securities: national security and social security. Abe, a defense
policy specialist of the postwar generation, has been calling for
amending Article 9 of the Constitution to open the door to
collective self-defense.

His stance toward China has also been persistent. In November
1998, he attended a meeting of Japanese and Chinese leaders as
son of the late Shintaro Abe, who served as foreign minister. He

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directly advised President Jiang Zemin:

"It is impossible for all the peoples of Japan and China to have
the same perception. It is important to consider the friendship
between the two countries while acknowledging each other's
differences."

Shortly after winning a Diet seat for the first time, he also
became a member of the ruling bloc's social security project
team, followed by deputy director and director of the LDP Social
Affairs Division, and a director of the Lower House Health and
Welfare Committee. Tackling such issues as pension, medical, and
nursing care, he called for greater safety nets.

Shortly after the establishment of the Koizumi administration,
LDP members with ties to special interests called for cutting
back on social security spending for fear of curtailment of
public works projects. Abe, who was serving as deputy chief
cabinet secretary at the time, vocally objected to the call,
saying, "Social security concerns every citizen."

Abe does not forget social security when he speaks of the need to
continue the Koizumi reform drive. Abe delivered a street speech
in Ishikawa Prefecture on March 12 in which he said, "Without a
vigorous economy and society, we will not be able to maintain
society security, which is vital."

Abe also took the initiative in launching a council encouraging
society to give a second chance to entrepreneurs. The council's
inaugural meeting took place yesterday at the Prime Minister's
Official Residence (Kantei),with bureau directors of concerned
ministries and agencies attending. At the meeting, Abe cited a
resident of Yamaguchi Constituency No. 4, his home turf, as
complaining, "Once a company fails, one loses his credibility as
well, and he cannot rise again."

Abe has been eager to deal with social divide apparently in an
apparent effort to generate his own policy imprint with the
reform argument in mind. "I want to build a Japanese society that
is full of energy and yet is gentle to the people," Abe said in a
speech in Tokyo in February. Abe intends to pursue both the
Koizumi-style market mechanism and the relief of the socially
weak.

Hates hawkish image

Abe has become a national figure owing to his rock-solid, hard-
line stance in dealing with issues, including the abduction
issue. But Abe hates being called as a "hawk" by LDP members and
others in the fields of diplomacy and security. "Labeling people
is meaningless," Abe said.

Asked about his diplomatic stance March 13, he said before the
Upper House Budget Committee: "Regrettably, I'm often called a
hard-liner. But what is important is to maintain friendly
relations with South Korea and China."

But he remains antagonistic toward "doves." Appearing on
television in January, Abe said:

"I don't regard myself a hawk in any way. But I think many of

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those who are referred to as doves are content with being called
that way."

Veteran LDP lawmakers who think Japan needs to revamp its Asia
policy are trying to zero in on Abe's right-leaning diplomatic
stance with an eye on the LDP presidential election in September.

How will Abe combine the two security arguments and expand the
horizon for domestic and foreign policies? The key lies in his
efforts to present a new national image and win support from
other LDP members.

(6) Editorial: Muraoka acquitted: Hashimoto's turn to testify
before Diet

ASAHI (Page 3) (Full)
March 31, 2006

Many people might have be disappointed at the Tokyo District
Court's decision that former Liberal Democratic Party (LDP)
Secretary General Kanezo Muraoka was acquitted of the charge of

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having accepted a secret 100 million yen political donation from
the Japan Dental Association (JDA) in July 2001 that was passed
to the LDP's faction head, former Prime Minister Ryutaro
Hashimoto. Muraoka was acting chairman of the faction at the
time. From the start, the story was full of doubtful elements.

Although Ryutaro Hashimoto, Hiromu Nonaka and Mikio Aoki received
the 100 million donation from the JDA, received when dining with
dental association executives, the faction failed to list the
donation in its annual report on political funds to the
government. The prosecutors alleged that Muraoka conspired to
hide the donation.

Hashimoto, Nonaka and Aoki had their indictments suspended, but
Muraoka, who had retired from the politics after being defeated
in the election, and the former treasurer of the faction were
charged with concealing the donation. The question is why only
Muraoka and the former treasurer were indicted but those
politicians present on the spot when the 100 million yen check
was handed over were not.

Even after the scandal's revelation, Hashimoto's explanation that
he did not remember (whether he received the check or not)
created growing suspicions about why the other two were alone
charged.

The thrust of the prosecution's allegation was the testimony by
the former treasurer that Muraoka had ordered him to hide the
donation. Muraoka, however, asserted his innocence.

The court determined that the testimony of the former treasurer
"not reliable" because the treasurer kept changing his statements
and there were contradictions in his testimony.

The presiding judge explained the reason why he had determined
that the former treasurer had given false testimony:

"There is the possibility that the 100 million yen donation had
been handled as the political contribution to former Prime
Minister Hashimoto. It is just conceivable that the former

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treasurer wanted to prevent the scandal from causing trouble for
Hashimoto, and to avoid having the faction suffer a great blow."

The judge hinted at Hashimoto's involvement in the scandal.

The judge's explanation is very persuasive for it addresses our
doubts.

At any rate, there undeniable were problems with the
investigation carried out by the prosecutors. The Diet should
take the court ruling as criticism for a lax response.

The opposition parties repeatedly demanded that Hashimoto be
summoned to testify before the Diet, but such was never realized
meeting the position by the ruling coalition.

At a session of the House of Representatives Deliberative Council
on Political Ethics in the fall of year before last, Hashimoto
stated as if the 100 million yen donation was not his problem, "I
probably received it, but I don't remember it."

Hashimoto, who served in such an important post, should testify
openly and squarely in a public forgone as a witness, not before
the political ethics council, statements in which are not accused
of perjury and are not opened to the public.

The scandal is one of the reasons why Hashimoto retired last year
from the political world. However, he is expected to meet in
Beijing with Chinese President Hu Jintao as leader of a
delegation of seven groups to promote Japan-China friendship. He
has continued to have political influence centered on diplomacy.

It is not too late to summon Hashimoto to testify as a witness
before the Diet. The Diet should do its best to shed light on the
illegal donation scandal.

(7) Policy debates start in divided Japan (Part 2): LDP fears
fallout from society of disparity

ASAHI (Page 1) (Slightly abridged)
March 30, 2006

Last October, the Liberal Democratic Party (LDP) held a joint
meeting of its committees on policy-based financial reform. The
focus of discussion was on plans to streamline Shoko Chukin Bank
and Japan Finance Cooperation for Small Business. Koizumi's
proteges took the lead in the discussion. In the meeting, these
views were presented: "Reform plans must be implemented;" and
"the presence of policy finance institutions has pressed the
management of private firms."

House of Councillors member Yoshifumi Matsumura refuted such
views in favor of reform. He said: "Reform is necessary, but
there are some plans that must be thoroughly discussed. The role
of policy finance institutions is to lend money to those who
cannot borrow from private banking institutions."

Seeing executives from leading banks or foreign securities firms
on the boards of policy finance institutions, Matsumura, who once
chaired the Young Entrepreneurs Group of the Japan Chamber of
Commerce and Industry, thinks: "They do not understand borrowers'

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feelings."

The LDP's "Association to Foster Small Businesses," which was set
up to review deregulation, has been dormant, with the post of
chairman left vacant since former International Trade and
Industry Minister Kabun Muto stepped down in 2005. Diet members
acting on behalf of commerce and industrial groups, as well as
executives at small businesses are dissatisfied with the current
state, one lawmaker grumbling: "When we complain about the
situation, we are told 'you are trying to get benefits' or 'you
are the forces of resistance'."

Matsumura and other participants who raised objections in the
joint meeting were feeling a sense of isolation, fearing that
once the viewpoint of the stronger side - lenders - dominated the
LDP, the party might become less interested in rescuing the weak.
Foreign Minister Aso, who served as LDP Policy Research Council
chairman when the Koizumi government was launched in 2001, called
the LDP's postwar economic policy "petition politics."

Under "petition politics," industrial groups, joining hands with
LDP policy cliques in the Diet and relevant government ministries
and agencies, ask influential officials to protect their
interests. Industrial groups would receive subsidies and special
tax treatment, while the LDP would get votes and money from the
industries. This is a cooperative system through petitions
established between politicians, bureaucrats, and businesses.

The Nakasone administration in the 1980s failed to destroy such a
cozy system. Just after the bursting of the bubble economy in the
1990s, the government implemented measures to buoy up the economy
by increasing public works projects, resulting in making the
collusive system more rigid.

In his policy speech in the fall of 2001, Prime Minister Koizumi
said that in order to put the economy on a recovery track under
the lead of the private sector, there would be no other means but
to destroy the collusive structure. He also revealed the policy
of taking assistance measures for small businesses, instead of
protective measures, saying: "I will double the number of new
business startups over the next five years." Following the Small
Business Challenge Support Law enacted in 2002, the government
revised the New Business Promotion Law in 2003 to remove the
regulation on minimum capital and enable entrepreneurs to start
up new businesses only with one yen as capital."

The prime minister visited this January the plant of a metal
processing company with only six workers in Higashi-Mukojima,
Tokyo, This company developed a 0.2-mm injection needle. The
prime minister commented: "I was aware that not only leading
firms but also small businesses have supported the Japanese
economy."

Midori Matsushita, chairman of the LDP Economy and Industry
Division head and who was elected from this district, felt
something different about it. She said: "There are many small
companies that are greatly motivated but have difficulty in
raising funds. I want the prime minister to realize that there
are many cash-trapped small firms."

Some LDP members are worried that people, in response to widening

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income disparity, might abandon the LDP. One official said:
"Downtown shop owners who were supporting us turned their backs
and easily supported the New Komeito or the Japanese Communist
Party."

On March 27, when the fiscal 2006 budget bill passed the Diet,
the prime minister commented, remembering the days when his
administration was launched in 2001, that although many called on
the government to give priority to economic stimulus measures
over reform, "I stressed the need for reform."

But Japan now faces a crossroads. There is a document that senior
members of the LDP's Economy and Industry Division have worked
out. The document classifies firms into "petty, small, and medium
companies" and proposed these policy measures: (1) Establish a
small business basic law for companies with less than five
employees; and (2) look into the success or failure of businesses
capitalized at one yen. Acting division head Hiroshi Kajiyama, a
House of Representatives member, said: "It is necessary to
reconsider if the current measures for small businesses worked
out without giving consideration to the size of each firm are
really effective and helpful. Different sizes of firms have
different desires."

The prime minister said: "In any country, there is a certain
level of social discrepancy," but it is difficult to dissolve the
seriously widening income gap between small firms under a re-
distribution system.

Upper House member Hirohide Uozumi, who served as advisor to the
Central Federation of Societies of Commerce and Industry in Japan
said:

"Due to a lack of successor at local firms, they pull back on
capital investment, resulting in losing jobs. We failed to hammer
out effective means to prevent this vicious cycle."

Lower House member Junichiro Yasui, who was a member of the
Waseda Shopping Street Association, stated: "It is undesirable to
call for subsidies. Once companies receive money, they do not try
their indignity to revitalize business."

Attention has been focused on the need to correct the widening
wealth gap in society at last after the "lost five years."

DONOVAN