DAILY SUMMARY OF JAPANESE PRESS 04/18/06

UNCLAS SECTION 01 OF 12 TOKYO 002094

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SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 04/18/06


INDEX:

(1) Futenma relocation: V-airstrip plan iffy; Expert wonders if
US military will follow agreement

(2) Japan, US talks on Guam relocation cost in final stretch; Two-
plus-two on May 2; US lowers total cost to 9.5 billion dollars
but Tokyo, Washington still wide apart

(3) China's ban on sea traffic in East China Sea does not cross
over the Japan-China median line, says Chinese Foreign Ministry;
China corrects error in its previous notice

(4) Minshuto head Ozawa to clash with government, ruling
coalition over a set of three issues: social divide, Yasukuni
Shrine visits, and foreign policy

(5) WTO Doha round unlikely to reach agreement; US gradually
moving away from WTO

(6) US Embassy minister in speech emphasizes America's efforts to
address environmental issues

(7) Visitors' gallery column: US Fair Trade Commission Chairman
Deborah Majoras says Japan should put more effort into studying
competition policy

(8) Future course of Food Safety Commission - Interview with
Yasuhiko Nakamura, member of FSC and guest professor at Tokyo
University of Agriculture: Panel is still immature but in right
direction

(9) Examining post-Koizumi contenders (Part 1): Sadakazu Tanigaki

(10) Kasumigaseki confidential: Transfer of operations and
authority from government to private-sector

ARTICLES:

(1) Futenma relocation: V-airstrip plan iffy; Expert wonders if
US military will follow agreement

ASAHI (Page 39) (Full)
April 16, 2006

The Defense Agency and Okinawa Prefecture's Nago City have
reached a basic agreement on a plan to lay down a V-shaped pair
of airstrips across the cape of Henoko in the city to take over
the heliport functions of the US Marine Corps' Futenma Air
Station in its relocation to that coastal area. The agreed V-
airstrip plan is intended to avoid flying over neighboring local
communities. However, the plan is premised on a specific wind
direction and only expects a one-way landing approach and takeoff
roll. Self-Defense Forces officials and civilian experts are
raising questions about the plan, with one of them regarding it
as "iffy" and another wondering if the US Marines will fly along
the agreed flight paths.

The city of Nago, in its talks with the government over the newly
planned alternative base for Futenma airfield, insisted on its
stance of avoiding the setting of flight paths of US military
aircraft over the local communities of Henoko, Toyohara, and Abu.
In order to meet this precondition, the Defense Agency hammered

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out the idea of laying down two runways in a V-shape. One of the
runways is on the shoreside for normal landings and takeoffs
under the visual flight rule (VFR) and landings under the
instrument flight rule (IFR) in bad weather. The other airstrip
is on the seaside for takeoffs in bad weather.

The V-airstrip installation plan is premised on the wind
direction. "In the area of Henoko," Defense Agency Director
General Nukaga noted, "the wind blowing there is almost always
from the north." The Defense Facilities Administration Agency's
Naha bureau checked to see yearlong wind directions at the cape
of Henoko from April 2004. The DFAA found from the survey that
about 70% of the winds there were from the north side-northerly
or northeasterly winds.

Generally speaking, headwinds are ideal for the safe landings and
takeoffs of both helicopters and fixed-wing aircraft. Premised on
findings from the weather monitoring survey, US warplanes are
expected to land and take off from the southwest to the
northeast.

"They're going to deal with nature, but they're thinking to
themselves that the wind will blow in a specific direction only."
With this, Kensuke Ebata, a commentator on military affairs,
raised a question about the Defense Agency's way of thinking.
"It's strange to think that way," Ebata said. He added: "I've
never heard that there's a civilian airport or a military
facility that allows landing and taking off in a one-way
direction only. It's only natural to go around for safe landings
and takeoffs depending on the wind direction."

What if the wind blows the other way from the south? In this
case, one SDF officer noted: "In order to make a landing on the
shoreside runway, pilots would have no choice but to go around
and nose down in their landing approach from the other way around
over the Abu area to avoid a tailwind." The officer also said,
"They often take different flight paths in order to make safe
landings." One official in the Defense Policy Division of the
Defense Agency has also admitted: "We've yet to talk with the US
side about what to do when the wind blows from the south."

In the case of a southerly wind, the shoreside runway could be
used instead for taking off and the seaside one for landing.
However, many are raising a question about using different
runways for landing and taking off.

Even in the case of landing as expected by the Defense Agency,
aircraft could encounter a sudden gust of wind or other
unexpected conditions when it is about to touch down. In this
case, the aircraft has to nose up and go around. The pilot will
then need to fly his aircraft over the shoreside runway and try
again. However, the pilot has to make a considerably sharp right
turn if he tries to avoid flying over the Abu area's local
communities situated ahead of that runway, according to an SDF
pilot. "It's dangerous," the SDF pilot said.

Fixed-wing aircraft conducts 'touch-and-go' training at Futenma
airfield. In this case as well, it is impossible to use different
runways.

"On the map, they're supposed not to fly over local residential
areas," said an SDF expert on heliborne operations. "But," this
expert went on, "that's a far cry from the facts about weather

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conditions and actual flight operations."

Another problem is the type of aircraft to be deployed. The US
Navy has revealed a plan to deploy the MV-22 Osprey in Okinawa to
replace the Marines' carrier helicopters, beginning in the fall
of 2012 or later. The MV-22 Osprey is a tiltrotor vertical/short
takeoff and landing (VSTOL) aircraft, which can also fly at a
high speed like fixed-wing aircraft. The US Navy once suspended
its development of this aircraft due to its crashes.

(2) Japan, US talks on Guam relocation cost in final stretch; Two-
plus-two on May 2; US lowers total cost to 9.5 billion dollars
but Tokyo, Washington still wide apart

YOMIURI (Page 3) (Abridged slightly)
April 18, 2006

Talks between Japan and the United States on sharing the cost for
relocating US Marines from Okinawa to Guam -- the thorniest issue
in the realignment of US forces in Japan -- have now reached the
final stretch. But the negotiations on the costly project have
run into snags. Tokyo and Washington intend to hold a meeting of
the Japan-U.S. Security Consultative Committee of foreign and
defense ministers (2 plus 2) on May 2 as a deadline for settling
the issue and adopting a final report.

Tug-of-war

Prime Minister Junichiro Koizumi yesterday morning ordered
Defense Agency Director General Fukushiro Nukaga to make every
effort to swiftly settle the cost-sharing issue.

As part of the realignment of US forces in Japan, the governments
of Japan and the US have decided to reduce the number of US
Marines in Okinawa by 8,000 to alleviate the burden on the
prefecture. But reaching an agreement between Tokyo and
Washington on sharing the cost is a prerequisite for relocating
the troops, who will mostly go to Guam.

The US initially asked Japan to bear 75% of the total estimated
cost of 10 billion dollars, or 1.11 trillion yen, based on the
fiscal 2006 exchange rate. The cost included 7.5 billion dollars
(832.5 billion yen) directly connected with the relocation of
Marines, and 1 billion dollars (111 billion yen) for building
Navy and Air Force facilities. Japan, however, insisted that the
cost be reduced, arguing, "The total cost itself is not
reasonable."

Tokyo originally expressed its willingness to loan 3 billion
dollars (333 billion yen) for building family housing and other
facilities.

On April 13-14, Nukaga held talks with US Deputy Under Secretary
of Defense Richard Lawless and others in which the defense chief
presented a compromise plan of disbursing 3 billion dollars from
the general account in addition to the loan portion. The US also
lowered the total cost to 9.5 billion dollars (1.545 trillion
yen). But the two sides have yet to reach an agreement, as their
views are still wide apart.

Groundbreaking burden-reducing step

Japan has never financed a US military facility on American soil.

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During the 1991 Gulf war, Japan extended 13 billion dollars of
financial assistance to the coalition. To assist in Iraq's
reconstruction efforts, Japan also promised to provide 5 billion
dollars (555 billion yen) in official development assistance,
including 69.9 billion yen for SDF activities.

Nukaga emphatically said, "During the Gulf war, Japan disbursed 1
trillion yen from state coffers, and after the Iraq war, 500
billion yen was offered to assist Iraq's reconstruction efforts."
A senior Defense Agency official also took this view: "The US
force realignment is a once-in-half-a-century chance to reduce
Okinawa's burden. In view of international contributions, there
is every reason for Japan to pay its fair share of the cost."

A percentage formula or tallying specific items?

The Defense Agency thinks Japan should foot the bill by tallying
specific items rather than setting a certain percentage of the
total cost. The government wants to avoid its share from rising
in proportion to growing US estimates.

But the government's view is not necessarily monolithic with the
Foreign Ministry, which is ready to accept the percentage
formula.

The Defense Agency intends to settle the issue through talks
between the Nukaga-led Defense Agency and the US Defense
Department rather than at the April 24-25 senior working-level
talks in Washington.

(3) China's ban on sea traffic in East China Sea does not cross
over the Japan-China median line, says Chinese Foreign Ministry;
China corrects error in its previous notice

YOMIURI (Page 1) (Full)
Eve., April 18, 2006

China issued a notice banning ship navigation in the waters
around the Japan-China median line within (Japan's) exclusive
economic zone (EEZ). The aim of this notice was for China to
expand its exploration of gas fields in the East China Sea. In
this regard, the Chinese Foreign Ministry late yesterday
indicated that it would revise its previous notice, noting,
"There was a technical error in it." With this revision, the
oceanic area subject to the navigation ban will be waters that
fall within China's territory from the median line. This
information came from the Chinese Foreign Ministry to the
Japanese Embassy in Beijing.

According to an account by China, the Chinese Maritime Bureau
mistakenly set an area for the work scope for the expansion of
the Pinghu gas field in the East China Sea at latitude 27.7-29.4
north instead of at latitude 29.7-29.4 north. Correcting this
error, the bureau will revise the previous notice banning sea
traffic. According to the Japan Coast Guard (JCG),an area
stretching some 3.6 kilometers east to west and some 200
kilometers south crossing over the median line has been
previously prohibited from navigation. But with the revision, the
length of the area stretching south has been shortened to about
five kilometers.

Chief Cabinet Secretary Shinzo Abe stated at a press conference

TOKYO 00002094 005 OF 012


after a cabinet meeting this morning: "I am left with the
impression that it was merely a plain mistake. Even if the area
is within the Chinese territory from the median line, China needs
to pay due respect to the other country's rights and
obligations." He again indicated displeasure with China's
responses taken during the past few days.

(4) Minshuto head Ozawa to clash with government, ruling
coalition over a set of three issues: social divide, Yasukuni
Shrine visits, and foreign policy

TOKYO SHIMBUN (Page 2) (Full)
April 18, 2006

It has been ten days since Ichiro Ozawa assumed the presidency of
the main opposition party Minshuto (Democratic Party of Japan).
Ozawa has set a policy course of making a clear distinction
between the party's position and that of the ruling Liberal
Democratic Party (LDP). He has replaced his predecessor Seiji
Maehara's policy of presenting counterproposals in the Diet.
Ozawa instead will toughen the stance of opposing the government
and ruling coalition, focusing on a set of three issues: the
widening social gap, visits to Yasukuni Shrine by Prime Minister
Junichiro Koizumi, and Japan's foreign policy toward Asian
countries.

According to press reports, a candidate backed by Minshuto now
has an edge over other candidates running in the House of
Representatives by-election in the Chiba No.7 district. In a
campaign speech on April 15 for the Minshuto ticket, Ozawa took
up the issue of the widening social disparity in Japan. He
severely criticized the government, claiming, "Money makes money.
Gaps between the urban and rural areas are widening further.
Japan is creating an unfair society. We must change politics."

Ozawa has proposed the creation of a "fair country" that will
provide the people with a safety net. He wants to make clear the
distinction between the party's policy and the Koizumi reform
drive, which he says excessively relies on free competition and
market mechanisms. The special feature of Ozawa's policy is that
he highly values the lifetime employment and seniority-base
systems as measures for job security.

In his speech for Minshuto's candidate, Ozawa also criticized
Koizumi's repeated visits to Yasukuni Shrine, which will become a
main campaign issue in the LDP presidential race.

Ozawa's assertion is that Yasukuni Shrine is a place to honor
those who died in past wars. He stated that those branded as
Class-A war criminals did not die in battle, and they therefore
should not be enshrined at the shrine. Some critics have noted
that Ozawa's view is tantamount to political intervention in the
affairs of a religious institution.

Ozawa, however, wore an expression of relief, telling reporters,
"It would be easy to do so. If we obtain the reins of government,
we will do it immediately. I will tell you how to do it then."

Given Japan's deteriorated relations with China and South Korea
over Koizumi's Yasukuni visits, Ozawa has stressed that he would
do his best to strengthen Japan's Asia diplomacy.

Ozawa also places emphasis on Japan-US relations, just as Koizumi

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does. He, however, underscores that he would make efforts to
repair strained relations with neighboring countries, while
maintaining Japan-US relations as the axis. In that context, he
would further strengthen Asia diplomacy.

While criticizing Koizumi's foreign policy as tilting solely
toward the United States, Ozawa has proposed establishing a
national security system centered on the United Nations. Some
Minshuto members have said that Ozawa's views are more
understandable than Maehara's. Ozawa clearly mentions the policy
differences with Koizumi, "Since his policy is premised on the
present political system, our ways of thinking are different."
The question is how Ozawa will give shape to a "new Ozawa policy
line." Minshuto lawmakers have become increasingly interested in
a new version of Ozawa's book "Plan to Remodel Japan." Ozawa is
reportedly working on a revision.

(5) WTO Doha round unlikely to reach agreement; US gradually
moving away from WTO

NIHON KEIZAI (Page 3) (Slightly abridged)
April 17, 2006

The Doha round of World Trade Organization (WTO) negotiations,
which began in 2001, has been stalled. Overtures for a
breakthrough were repeatedly held, but all have failed so far.
The WTO Ministerial Conference intended for reaching a general
agreement on setting rules on trade liberalization is scheduled
for late April, but it is becoming increasingly unclear whether
it will actually take place as planned. The United States has
begun moving away from the WTO. It is instead shifting emphasis
to free trade agreement (FTA) talks.

Japan, US discuss on phone

"A number of difficult challenges remain to be addressed before
we reach a basic agreement at the end of April." This remark came
from US Trade Representative (USTR) Rob Portman in early April,
when he expressed concern on the phone to Minister of Economy,
Trade and Industry (METI) Toshihiro Nikai. Nikai, who wants to
finalize the talks with joint efforts with the US, sought
cooperation from Portman. However, a growing view among major
nations is that "it is difficult to reach an agreement before the
end of April," a senior METI official said.

This view is related to the failure in recent overtures for a
breakthrough in the deadlocked WTO talks. Six major nations and
regions, including Japan, the US, Europe, and Brazil, convened a
ministerial conference in London in mid-March but they failed to
achieve any visible results. Afterwards, the US, the European
Union (EU),and Brazil met twice in Rio de Janeiro on March 31
and on April 1, but their talks did not make progress on major
areas, such as a range of tariff cuts. Reportedly, USTR Portman
conveyed on the phone the atmosphere of the meetings to his
Japanese counterpart during the Japan-US consultations.

The WTO will hold working-level talks in Geneva starting on April
18, but when it comes to the ministerial conference planned for
later this month, no detailed schedule for it has been
determined, allowing only speculation that it will be postponed.

Difficult coordination in agricultural sector


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The biggest barrier to the (Doha round of) negotiations is the
agricultural sector. Most member nations have agreed to follow a
tariff reduction formula, under which heavy customs duties, for
instance, those on agricultural products, will be drastically
reduced. But when it comes to the focal issue of how far the
(tariff) rates will be lowered, no concessions have been made.
Brazil and the US have called for a 75-90% cut of tariffs on
products on which heavy customs duties are now imposed, while the
group of food importers, including Japan, insist that a reduction
rate should be limited to a maximum of 45% .

Meanwhile, the US, which has been urged to significantly cut its
farm subsidies, is now on the defensive. The US Congress is
increasingly moving toward protectionism. In fact, it raised
vehement opposition to an Arab-affiliated firm's takeover of US
port operations and then forced the firm to withdraw its
takeover. The Congress also is strongly opposed to a drastic cut
in farm subsidies. The US government is apparently stymied (by
the Congress' moves). In addition, Brazil and other countries are
under pressure to reduce their tariffs inflicted on industrial
products. "(WTO) negotiations are thus in a tangle," a government
official said.

If a general agreement is not reached (at the ministerial
conference) scheduled for the end of April, the conference will
be again held in June. But, "If no agreement is reached there, a
final agreement before the end of the year will become
impossible," a government official explained.

"If the talks fell apart, the US would have to shift emphasis to
FTA talks." This March, a US official made this remark to a
Japanese official in charge of WTO talks. The US has begun moving
away from the WTO. One government official expressed concern:
"Isn't the US planning to walk out of the WTO?"

The US Congress had granted the Bush administration the Trade
Promotion Authority (TPA) for negotiations, but the TPA will
expire at the end of June 2007. Given the time necessary to go
through the process of obtaining approval from the Congress, if a
final agreement is reached before the end of the year, the Doha
round would be in effect stopped.

A senior Foreign Ministry official expressed concern: "Maybe the
US is attempting to form a club of the willing in the trade area
as it did in invading Iraq while shrugging off the United
Nation's resolution?" If that were to happen, the momentum toward
trade liberalization that has now swept across the world,
including developing nations, could wither at once.

(6) US Embassy minister in speech emphasizes America's efforts to
address environmental issues

CHUNICHI SHINBUN (Page 23) (Full)
April 15, 2006

By Shinya Abe

Joyce Rabens, minister for environment, science and technology at
the US Embassy in Tokyo, delivered a speech at the Nagoya
American Center in Nagoya City regarding America's efforts to
address climate change, including global warming. In the speech,
she highlighted the Bush administration's positive stance toward
environmental issues.

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The United States left the Kyoto Protocol, an international
treaty on prevention of global warming, and has yet to return.
Minister Rabens was not positive about America returning to the
pact: "Given the Senate's opposition to signing the Protocol, the
US is unlikely to return."

On the other hand, Rabens stressed that the US government "has
poured as much money as other countries for anti-global-warming
measures."

From the standpoint of national security, she pointed out the
need to reduce dependence on imports of energy resources and
pointed out the steps (the US has taken in that regard): "We have
promoted through the tax system the use of such alternative
energy resources as atomic energy, solar energy, and wind power";
and, "We have placed restrictions on the fuel used by new pickup
truck models (such as recreational vehicles)."

Rabens was asked questions from the audience, for instance, about
average person's awareness of environmental issues and America's
transportation system that tends to depend heavily on automobiles
and airplanes, which are not viewed as being energy-efficient.

Rabens answered proudly, "America is second to none in its
efforts to address environmental issues, for instance, reducing
the use of plastic shopping bags and recycling plastic bottles."
Commenting on the traffic system, she explained the situation in
her country: "A high-speed railway, if constructed, would be
effective (in view of cutting green house gas emissions),but a
vast investment would be necessary. Legislators have no interest
in investments that will have no effect on the next election."

(7) Visitors' gallery column: US Fair Trade Commission Chairman
Deborah Majoras says Japan should put more effort into studying
competition policy

NIHON KEIZAI (Page 19) (Full)
April 17, 2006

Deborah Majoras, chairman of the US Fair Trade Commission points
out: "It was said that because of Japan's corporate culture and
other factors, the system of surcharge leniency (under the
amended Anti-Monopoly Act) would not work, but the fears were
groundless." She lauded the fact that the first examples of
reporting offenders have come out under the system, saying,
"Japan and the US are now on equal ground in terms of companies
seeking to improve productivity (under fair competition).

Even in the US, which preceded Japan on this, it was thought at
first that there would be few companies reporting offenders.
However, in reality, the exposures have been effective. "I would
like to see more efforts put not only into exposing offenders but
also into studying how to make competition policy even better, "
she said.

(8) Future course of Food Safety Commission - Interview with
Yasuhiko Nakamura, member of FSC and guest professor at Tokyo
University of Agriculture: Panel is still immature but in right
direction

ASAHI (Page 15, 2006)
April 14, 2006

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I appreciate the efforts of the members of the prion experts
panel in tackling the very difficult work of assessing risk. It
is regrettable that half of the members resigned recently. Most
of them left the panel due to age limits or personal
circumstances. It is very simple and dangerous to label those who
resigned as skeptics (of resuming US beef imports). Some said
that they were forced out of the panel under political pressure,
and others claimed that they were replaced with "yes-men." Such
views are just based on conjecture.

Some of the members who stepped down take the view that a
conclusion has already been reached" and that "the assessment is
not being done on a scientific basis." But I do not think their
views are correct. I have attended various deliberations and
study meetings held at ministries and agencies hundreds of times.
In such meetings, the chairman and the secretariat always set the
direction. Seeing such a situation some criticized that the
ministries and agencies set policies as they like under the cover
of such meetings. Such criticism is somewhat reasonable.

Expert panel members conducted a good 10 rounds of discussion on
US beef, without setting a time limit. The Ministry of Health,
Labor and Welfare (MHLW) and the Ministry of Agriculture,
Forestry and Fisheries (MAFF) must have been irritated at the
pace.

Since information on US beef, covering from production to
distribution, was quite insufficient, the panel collected data to
make up for the lack of information. But data were not enough,
either. Under such a situation, the panel came up with a final
assessment on the premise that the US would fulfill the
conditions set by Japan in resuming imports. Though it was an
anguished judgment, I think it was also a scientific assessment
of sorts.

If a member harbors dissatisfaction, that person should make an
assertion during an open meeting in a thorough way. We do not
mind even if the number of meetings increases. All panel members
take responsibility for a report worked out by the panel. If a
member complains about the report afterwards, such is rude to
other members and will confuse the public. In any conference, all
participants cannot necessarily be satisfied with the decisions
reached there. Various opinions are presented, and coordination
is carried out to seek a point of compromise.

I also feel that the MHLW and MAFF had set the course of having
the panel start looking into domestic anti-BSE measures, review
the nation's blanket-testing system, and then deliberate on US
beef. We had not noticed this scenario.

In this sense, we need to mull how to response to the
government's requests for our advice and suggestions from now. If
there are problems in such requests, or if the panel finds it
difficult to conduct discussions, we will take the time needed
for discussion. We might come up with a conclusion that
deliberations are unnecessary.

Our panel is independent of the government, but it cannot be
completely unconnected with it, because there are the public is
behind the lawmakers. The panel cannot take action that ignores
society. Given this, the Food Safety Commission (FSC) is
accountable to both the political sphere and the public. The

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panel also needs to listen to an explanation about why the
government asked for its advice. It is not enough for the panel
to only assess risk on a scientific basis. It is important for
the panel to perform its duty while keeping itself politics at
arm's length while maintaining a tense relationship with it.

When the first case of BSE was found in Japan in September 2001,
a major panic broke out. The blunders made by MAFF deepened
consumer distrust further. A series of beef mislabeling incidents
and labeling violations threatened the safety and security of
food. If we adopt our conventional method for scientific
assessment in our usual way, people might think that we are
helping the management side, including the MHLW, to conduct their
jobs in an easier way.

In order to restore consumer confidence in beef, the government
separated the function of scientific assessment from the function
of management and set up the FSC, with the aim of pursuing a
fairer judgment. Though the panel is in the right direction, it
is still immature because it was inaugurated only less than three
years ago. The panel has still repeated the process of trial and
error. It might be considered that the recent "uproar" was caused
due to its immaturity.

(9) Examining post-Koizumi contenders (Part 1): Sadakazu Tanigaki

NIHON KEIZAI (Page 2) (Abridged)
April 17, 2006

On April 15, Finance Minister Sadakazu Tanigaki made a one-day
trip to his home turf, House of Representatives Kyoto
Constituency No. 5, for the first time in about six months.

"He is stubborn when it comes to policies"

Tanigaki delivered a speech in Maizuru. Asked afterward about his
aspirations to become prime minister, Tanigaki modestly said:
"Revamping the country's finances is the biggest challenge for
the successor to Prime Minister Koizumi. I need to produce solid
plans first in order to seek the position." Later on, Tanigaki
visited the grave of his father, Senichi, in Fukuchiyama.

Tanigaki has repeatedly referred to the need to swiftly hike the
consumption tax, turning a deaf ear to other lawmakers' advice to
keep the LDP presidential election in mind by abstaining from
mentioning the possibility of a future tax hike. Health, Labor
and Welfare Minister Jiro Kawasaki, one of Tanigaki's strongest
supporters, described him this way: "He works honestly and
diligently without playing to the gallery. But he is unexpectedly
stubborn when it comes to policies."

In September 2002, Tanigaki became chairman of the National
Public Safety Commission in the Koizumi cabinet. Although nearly
three years have passed since he was shifted to the post of
finance minister, Tanigaki's popularity ratings as a potential
Koizumi successor are still hovering around 2%. LDP members close
to Tanigaki are more eager than Tanigaki himself to make him the
next prime minister.

Knowledgeable about policies and having a warm personality,
Tanigaki has long been regarded as a future prime ministerial
candidate by members of Kochikai (former Miyazawa faction).
Ironically, Tanigaki captured national attention during the so-

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called Kato rebellion against then Prime Minister Mori.

A tearful Tanigaki trying to dissuade Kato from voting for an
opposition bloc-presented no-confidence motion against the Mori
cabinet in a Lower House plenary session that was televised
nationally.

Upset by the scene, Sadatoshi Ozato, who was serving as
"guardian" to Tanigaki, immediately called the lawmaker to a
Japanese restaurant near the Diet building to chide him: "What
are you thinking about? A lawmaker's action has a lasting impact
on the public." Looking back on the incident, a fellow lawmaker
also said bitterly, "That tarnished Mr. Tanigaki's image."

Five and a half years have passed since then. Former factional
colleagues, such as Kawasaki, Yasuo Fukuda, and Gen Nakatani,
have been busy paving the way for Tanigaki's candidacy for the
LDP presidency. In April, they met twice on Friday nights to work
out their strategy.

On the night of April 7, when Tanigaki was on an official trip
abroad, factional executives had a heated discussion on measures
for the faction's May 15 party. A plan is also underway to unveil
the faction's policy proposals at the upcoming party to make them
a Tanigaki administrative vision.

But Tanigaki himself remains elusive. Tanigaki supporters met for
the second time on the night of April 14 to work out their
strategy. But Tanigaki cancelled his attendance at the eleventh
hour, citing another meeting. Other members were visibly
disappointed.

Only 15 members

Of the four post-Koizumi contenders -- Taro Aso, Tanigaki
Sadakazu, Yasuo Fukuda, and Shinzo Abe -- only Tanigaki is a
faction leader. But his faction is small with only 15 members -
five short of the required endorsements of 20 lawmakers for
seeking the LDP presidency. There are movements to reunite
Kochikai as well. But given Abe's high popularity, a mood to
support Tanigaki is not gaining momentum.

Will the simple and honest approach of calling for fiscal
reconstruction alone be able to bring bright prospects for
Tanigaki?

(10) Kasumigaseki confidential: Transfer of operations and
authority from government to private-sector

BUNGEI SHUNJU (Page 234) (Full)
May 2006

The Council on Economic and Fiscal Policy, an advisory panel to
the government, has been working on drafting measures in line
with Prime Minister Junichiro Koizumi's policy line of
"transferring operations and authority from the government to the
private sector." However, what is happening in the advisory panel
itself is a "transfer from the private-sector to the government."

Prime Minister Koizumi and his private secretary, Isao Iijima,
early this year chose Atsuro Saka (joined the Finance Ministry in
1970) as assistant deputy chief cabinet secretary. Even the
Finance Ministry did not expect this appointment. The only aim of

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Koizumi and Iijima was to use Saka to counter Internal Affairs
and Communications Minister Heizo Takenaka, who deprived Saka of
his role while the two were working respectively as chair and
member of the Council on Economic and Fiscal Policy in the
Cabinet Office. As Koizumi noted, "Mr. Saka has a wealth of
experience in the Economic and Fiscal Policy Council," Saka
demonstrated remarkable negotiating skills and an ability to
coordinate views. He was an unusual person in the Cabinet Office,
which is made up of bureaucrats coming mainly from the former
Economic Planning Agency who are out of touch with politics.

Saka has now been working closely with Takenaka's successor,
Kaoru Yosano, state minister in charge of financial affairs. Both
Saka and Yosano are graduates of Azabu High School and the
University of Tokyo. They have been playing golf together for
some time.

Yosano, who favors Finance Ministry bureaucrats, installed
Yukihiro Oshita (entered the Finance Ministry in 1986) in the
newly established office to assist reform of the revenue and
expenditure system. Oshita served as secretary to Yosano during
his tenure as deputy chief cabinet secretary. Yosano has
consolidated the structure aimed at a consumption tax hike. All
the more because Saka and Oshita worked hard to draft the fiscal
structural reform law, which has been frozen as a symbolic
blunder in economic policy, they are enthusiastic returning to do
battle.

Council members from the private sector such as Osaka Prof.
Masaaki Honma who fell into line with Takenaka's views, are now
toeing the line of the bureaucrat-centered council. Takenaka is
now like an airplane on the verge of crashing. Koizumi and Iijima
are only interested in how to maximize their power to the end.
The situation in the Council on Economic and Fiscal Policy, now
controlled by the bureaucracy, tells the true story about the
Koizumi reform drive that was carried out for nearly five years
without principles.

SCHIEFFER