JAPANESE MORNING PRESS HIGHLIGHTS 04/24/06

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SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 04/24/06

Index:

1) Top headlines
2) Editorials
Prime Minister's weekend schedule: None

LDP's election woes:
3) Ozawa's Minshuto candidate wins in the Chiba by-election by
narrow margin, dealing painful blow to LDP
4) Defeat in Chiba election, which the LDP should have won, is
a big setback for Koizumi-style politics, reforms
5) Ihara wins mayoralty race in Iwakuni City, calls it a
"victory for the urban citizens" who said "no" to plan to move US
jets from Atsugi
6) Central government will continue with plan to move US jets
from Atsugi to Iwakuni base, despite win of mayoralty race by
Ihara
7) Major base-hosting cities are starting to fall into
opposition hands

Defense and security issues:
8) JDA chief Nukaga about to meet Secretary Rumsfeld in
Washington after talks with Deputy Under Secretary Lawless,
Ambassador Schieffer
9) Nukaga discusses lowering Japan's share of Guam relocation
with Lawless, Schieffer
10) With resolution of Japan's share of cost of relocating
Marines to Guam still up in the air, final decision kicked up to
defense summit level
11) Flash: Japan, U.S. Agree on costs for moving Marines to
Guam: Nukaga

Compromise on Takeshima survey issue:
12) South Korea agrees to postpone naming underwater sites near
Takeshima at international conference in return for Japan
recalling ships from disputed waters
13) Diet members are calling for a new set of rules to govern
marine activities around Takeshima islets

14) Foreign Ministry breathes sigh of relief as Iraq selects
Shiite member Maliki to be prime minister

15) Director general talks in Teheran between Japan, Iran on
nuclear issue ends in failure

16) Finance Minister Tanigaki, Treasury Secretary Snow discuss
economy, IMF during meeting in Washington

17) Imports of US potatoes into Japan are halted again over bug
infestation

Articles:

1) TOP HEADLINES

Asahi: Mainichi: Yomiuri: Sankei: Tokyo Shimbun:
DPJ-backed Ota wins close by-election for Lower House Chiba
Constituency race by 955 votes; First victory for President
Ozawa; Blow to LDP, Koizumi reform drive

Nihon Keizai:
Nissan to build passenger car plant in Russia with annual

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production capacity of 20,000 units, starting in 2008

2) EDITORIALS

Asahi:
(1) DPJ wins in Lower House by-election in Chiba: What is DPJ
president Ozawa's next move?
(2) One year since JR accident; What should JR do in order to
really transform itself?

Mainichi:
(1) DPJ wins in Lower House by-election in Chiba: Comeback of
politics with sense of tension
(2) Suspension of maritime survey near Takeshima islets:
Government should rush for full-fledged talks with South Korea to
remove source of contention

Yomiuri:
(1) By-election in Chiba Constituency No. 7: Will DPJ's victory
give impetus to its efforts for revitalization
(2) One year since JR railway accident at Amagasaki: Only
halfway to dissolving passengers' misgivings

Nihon Keizai:
(1) Ozawa-led DPJ secures stepping stone for revitalization
(2) Consequence of crises of GM and Ford

Sankei:
(1) DPJ wins in Chiba by-election: Competition for reform by two
major parties urged
(2) Japan-South Korea reach agreement on Takeshima issue:
Stopgap measure will pass the buck to the future

Tokyo Shimbun:
(1) Chiba by-election: Are voters tired of Koizumi politics?
(2) Japan-South Korea agreement on Takeshima islets: Working-
level talks urged

3) Ozawa-led Minshuto wins Lower House by-election in Chiba's No.
7 district by slim margin of 955votes; LDP suffers stinging
defeat

SANKEI (Top Play) (Lead Paragraph)
April 24, 2006

Minshuto (Democratic Party of Japan) candidate Kazumi Ota, 26, a
former Chiba Prefectural Assembly member, defeated Liberal
Democratic Party (LDP) candidate Ken Saito, 46, former vice
governor of Saitama Prefecture, by a narrow margin of 955 votes
in a House of Representatives by-election in Chiba's No. 7
district yesterday. With victory in the first election conducted
under his leadership, Minshuto President Ichiro Ozawa now has a
basis for turning up the heat on the ruling coalition. Meanwhile,
the LDP, which played up the continuation of Prime Minister
Junichiro Koizumi's reform drive, has suffered a stinging defeat.
The expectation is that Koizumi's grip on the party will weaken.
The result of Sunday's Lower House by-election will inevitably
affect the September LDP presidential race, with an eye on next
summer's House of Councillors election.

4) Minshuto to draw clear line from ruling coalition at second
half of Diet session; Ruling camp to plays up continuation of

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reform drive, Minshuto to pursue social divide issue

NIHON KEIZAI (Page 2) (Full)
April 24, 2006

In the wake of its victory in a House of Representatives by-
election for the Chiba No. 7 constituency, the main opposition
party Minshuto (Democratic Party of Japan) intends to engage in
heated debate in the second half of the current Diet session,
calling for correction of the growing social disparity and other
related issues that reflect the negative effects of Prime
Minister Junichiro Koizumi's reform program. The ruling coalition
is determined to pass such key bills as one to promote
administrative reforms, as well as a bill to reform the medical
system. The ruling camp will also pledge to carry out the reform
policy line. There is a possibility that the ruling and
opposition camps will head for another showdown on the Koizumi
reform drive as they did in the first half of the ongoing Diet
session.

Liberal Democratic Party (LDP) Secretary General Tsutomu Takebe
stated at a press conference yesterday on his party's Diet
management in the future, "We will deal with Diet business as a
different matter from the result of the election." A senior LDP
member indicated there would no change in the reform policy line,
saying, "With the next House of Councillors election in mind, we
should not change our present policy line to a policy course to
bring about large government and tax hikes."

The ruling parties intend to pass the administrative reform and
medical reform bills before the end of May. They also plan to
come up in June with a process for a plan to reform the revenue
and expenditure systems in order to continue the ongoing reform
program even after Prime Minister Koizumi steps down from office.

"Many people are unhappy with and worried about Japan's present
politics," Minshuto President Ichiro Ozawa said after his party's
candidate won yesterday's by-election. He has now assumed the
stance of facing down the ruling coalition. The largest
opposition party intends to pursue the "dark side" of the Koizumi
reform drive, including the widening social disparity?

5) Katsusuke Ihara wins Iwakuni mayoral election; Calls it
"citizens' victory" for saying "no" to US military relocation

TOKYO SHIMBUN (Page 23) (Full)
April 24, 2006

Iwakuni City yesterday elected as its first mayor since its
merger Katsusuke Ihara, 55, who has called for scrapping a plan
to relocate US carrier-based aircraft to the local US Marine
Corps base. The election was held a month and a half since an
overwhelming majority of Iwakuni voters expressed their
opposition to the plan in a March referendum. Ihara commented:
"It is a victory for the citizens, who expressed their good
sense."

When TV news reported at around 9:45 p.m. that Ihara was sure to
be elected, supporters in his office burst into applause.
Appearing before them, Ihara categorically told them: "I know the
outcry of the local citizens toward the relocation plan. I want
the central government to take their voices seriously and discuss

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the issue with local communities."

Ihara carried out a grass-roots campaign. Sumie Tanaka, 69, a
housewife, said: "I don't want to hand down the burden of US
bases to our children and grandchildren. I want the mayor to
transmit the voice of we at the local level to the central
government."
Taro Asjimura, 38, who was defeated by Ihara, bowed profoundly
and said, "I'm sorry I was unable to meet your expectations."

6) Ihara wins Iwakuni mayoral election; Government determined to
push for relocation plan

ASAHI (Page 2) (Excerpts)
April 24, 2006

Katsusuke Ihara, the former Iwakuni mayor who opposes the planned
relocation of US carrier-based aircraft to the US Marine Corps'
base in the city, won the mayoral election yesterday in Iwakuni,
Yamaguchi Prefecture. In response, Defense Agency Director
General Nukaga said: "We will make utmost efforts to obtain local
understanding and cooperation," but the government is determined
to forge ahead with the realignment plan as agreed on between
Japan and the US. In the government and ruling camp, however,
many officials have voiced concerns about the impact of Ihara's
victory on the plan, which is scheduled to start in fiscal 2008
or after. The government will have to pay the price for having
put efforts to obtain local understanding on the backburner, as
was the case with the US Marine Corps Futenma Air Station.

Chief Cabinet Secretary Abe released a comment last night saying,
"I am disappointed with the election result, but we will continue
our efforts to explain US military base issues to the citizens in
a sincere manner."

Ihara is calling on the government to withdraw the relocation
plan, but the government has no intention to comply with it, as
Foreign Minister Aso said: "National defense is an issue that
should be controlled exclusively by the government." The central
government intends to include the plan in a final report being
worked out by Japan and the US and to move it forward.

In its efforts to obtain understanding from the local communities
involved in the plan to realign US military forces in Japan, the
government gave top priority to winning agreement from Nago City
for the Futenma issue. Relocation work involving Iwakuni will
start in or after fiscal 2008, when the construction of an
offshore runway is to be completed. Now that the government has
won agreement from the Nago municipal government, it is
determined to push ahead with the entire US force realignment
plan.

7) Ruling party candidates being defeated in number of mayoral
elections across nation, including Iwakuni

NIHON KEIZAI (Page 1) (Full)
April 24, 2006

The ruling parties yesterday lost a number of mayoral elections
that were in the public spotlight, including the Iwakuni mayoral
election in Yamaguchi Prefecture, where the campaign issue was
how to respond to the US aircraft carrier-borne jet transfer

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plan.

Twenty-six mayoral elections took place yesterday, because
elections for local government heads coincided with major
municipal mergers in late March.

In Iwakuni, former Mayor Katsusuke Ihara (55),who has called for
the withdrawal of the US military relocation plan, was returned
to office after the merger to become the first mayor of the
enlarged city. He beat LDP-backed company president Taro Ajimura
(38). Ajimura supported a pragmatic policy of seeking development
measures in return for the acceptance of the relocation plan, but
he failed to beat Ihara.

In the Okinawa mayoral election in Okinawa prefecture, too,
Democratic Party of Japan (DPJ or Minshuto)-backed former Lower
House member Mitsuko Tomon (63),who is against the joint use of
US forces Kadena Air Base with the Self-Defense Forces (SDF),
defeated former municipal assembly member Sachio Kuwae (50),
endorsed by the Liberal Democratic Party (LDP) and the New
Komeito.

Commenting on the LDP-backed candidates' defeats in the Iwakuni
and Okinawa mayoral elections, Chief Cabinet Secretary Shinzo Abe
released a statement: "The results are regrettable. However, the
government would like to offer explanations on the base issue in
a sincere manner."

New independent candidate Toshinao Nakagawa (35),the second son
of LDP Policy Research Council chairman Hidenao Nakagawa and a
former secretary to him, ran in the Higashi-Hiroshima mayoral
race in Hiroshima Prefecture. He was defeated by new independent
candidate Yoshio Kurata (54),a former prefectural assembly
member.

8) Nukaga meets Ambassador Schieffer prior to meeting with
Rumsfeld on Guam relocation

ASAHI (Page 2) (Full)
April 24, 2006

Masahiro Tsuruoka, Washington

Over the issue of Japan's share of the cost of relocating Okinawa-
based Marines to Guam, Defense Agency Director General Nukaga,
now visiting the US, met with Deputy Under Secretary of Defense
Lawless and Ambassador to Japan Schieffer at a hotel in suburban
Washington for about one hour on the afternoon of April 22, local
time. Nukaga is scheduled to meet with Defense Secretary Rumsfeld
on the evening of April 23. Observers surmise that Nukaga tried
to seek out common ground prior to the meeting with Rumsfeld.

9) US to reduce Japan's share of cost for relocating Okinawa-
based Marines to Guam, reconsidering cost for constructing
housing

YOMIURI (Page 2) (Full)
April 24, 2006

Takashi Imai, Washington

Defense Agency Director General Nukaga, now visiting the US, met

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Deputy Undersecretary of Defense Lawless and Ambassador to Japan
Schieffer at a hotel in the Washington suburbs on the afternoon
of April 22, local time, to discuss Japan's share of the cost to
relocate Okinawa-based Marines to Guam. The US has indicated that
it would reduce the estimate cost for constructing housing for
troops and their families from 2.55 billion dollars (283 billion
yen on the basis of the exchange rate used for the fiscal 2006
budget) to about 2.1 billion dollars. The US has so far asked
Japan to pay 75% of the 9.5 billion dollars (1.545 trillion yen)
in the total Guam transfer cost. Reflecting the proposed
reduction in the housing cost, Lawless told Nukaga that the US
would reconsider Japan's share. Nukaga also promised that Japan
would provide a certain amount of grant aid, in addition to the
already announced loans worth about 3 billion dollars (333
billion yen). Lawless and Nukaga agreed on the need that a
settlement should be reached during a meeting between Nukaga and
Defense Secretary Rumsfeld set for the afternoon of April 23,
local time. Nukaga told reporters on the evening of April 22:
"There are many points now that we share a common understanding."

10) Settlement of Guam relocation cost remains fluid; Likely to
be resolved at defense summit level

SANKEI (Page 5) (Full)
April 24, 2006

By Naohisa Nakazawa in Washington

Defense Agency Director General Fukushiro Nukaga, who is now
visiting the United States, will meet with Secretary of Defense
Rumsfeld on the evening of the 23rd (early morning of the 24th,
Japan time) to resolve the issue of the cost of relocating
Marines stationed on Okinawa to Guam -- the remaining focal point
of attention in the realignment of US forces in Japan.

Prior to the meeting, Nukaga met on the afternoon of April 22
(early on the 23rd, Japan time) with US Ambassador to Japan
Schieffer and Deputy Under Secretary of Defense Lawless at his
hotel. There being no apparent progress in the talks, the
situation remains fluid whether the issue of Japan's share of the
cost can be resolved in the summit meeting of defense chiefs.

Director General Nukaga, after his meeting with Schieffer and
Lawless, told the press corps: "It is important to set up the
playing field (for debate). I will do my best so that both sides
will have a mutual recognition of the problem." The defense chief
also said: "Little by little, we are moving closer to a common
position."

11) Japan, U.S. agree on costs for moving Marines to Guam: Nukaga

KYODO --- WASHINGTON,
April 24 KYODO

Japan and the United States struck a deal Sunday on sharing the
costs of relocating 8,000 U.S. Marines from Okinawa to Guam,
Japanese Defense Agency Director General Fukushiro Nukaga said
after a meeting with his U.S. counterpart.

Nukaga said he and U.S. Defense Secretary Donald Rumsfeld agreed
that Japan will shoulder 59% of the total cost of $10.27 billion,
or $6.09 billion, including grants and loans.

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After the meeting, Nukaga told reporters the two agreed on the
cost sharing and all other points related to the relocation
issue. Rumsfeld said they reached common understanding in a way
that will be beneficial for both sides.

Japan's share of cost is broken down to $2.8 billion in grants,
$1.5 billion in investments and $1.79 billion in loans, according
to Nukaga.

Tokyo and Washington had been at odds over Tokyo's share for the
Guam relocation cost. The U.S. side had asked Japan to pay 75%,
or $7.5 billion, and the Japanese side had offered to grant $3
billion and loan another $3 billion.

The meeting between the defense chiefs was held after failing in
several rounds of senior working-level talks to nail down the
share to pave the way for completing an implementation plan for
an overall package of agreements they reached last October to
realign the U.S. military presence in Japan.

Now that they have an agreement, the two nations now hope to make
final arrangements at another round of senior working-level talks
Monday and Tuesday in Washington to set the stage for a top
security meeting of defense and foreign affairs ministers early
next month to finalize the overall implementation plan.

12) Japan calls off maritime survey near Takeshima, South Korea
shelves plan to propose Korean names for seafloor topography;
Agreement reached to conduct demarcation talks in May

ASAHI (Top play) (Excerpts)
April 23, 2006

Hayami Ichikawa, Seoul

An agreement was reached in Japan-South Korea vice-ministerial
talks yesterday on Japan's planned maritime survey in the
exclusive economic zone (EEZ),claimed by both Japan and South
Korea, near Takeshima, known as Dokdo in South Korea, that South
Korea would not propose Korean names for the seafloor topography
near the disputed islets at an international conference in June
and that Japan in return would not conduct the maritime survey.
The two sides also agreed to resume director-general-level talks
in May on the demarcation of EEZs near Takeshima. South Korea
threatened that if Japan carried out the maritime survey, it
would not hesitate to seize Japanese survey vessels. But a clash
with South Korea has been averted for the time being.

Following the session April 21, Administrative Vice Foreign
Minister Shotaro Yachi held talks intermittently with South
Korean First Vice Minister Yu Myung Hwan for nearly 10 hours at a
Seoul hotel yesterday.

After the talks, Yachi told reporters:

"We both explained our respective positions fully and finally
managed to cut a package deal. We exchanged views severely, and
it was hard to find a settlement line."

He also said about Japan's proposal for establishing a system
requiring the two countries to notify each other before

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conducting a maritime survey in the area where the two countries'
EEZs overlap, "South Korea was not in a mood to accept Japan's
proposal."

Despite compromise, source of territorial row remains

Commentary

Japan and South Korea both made compromises April 22 regarding
the issue of Japan's planned maritime survey in the Sea of Japan
in a bid to avert a clash. In shelving its plan to propose Korean
names for seafloor topography, South Korea affirmed its
standpoint of making proposals "at a time of its choosing." As a
result, Seoul would not come under fire from the hard-liners in
the country for backtracking its standpoint. But the source of
the Takeshima row with South Korea still remains.

13) Government, ruling parties come out with views favoring
consideration of new rules regarding maritime surveys around
Takeshima, naming of topographical features

NIHON KEIZAI (Page 2) (Excerpt)
April 24, 2006

Although the government and ruling camp yesterday gave high marks
to the resolution of the issue of the maritime survey in waters
around Takeshima (Korean name, Dokdo) that avoided a worst-case
scenario, the views coming out one after the other seek as the
next challenge the creation of rules regarding such surveys and
the naming of underwater features. Liberal Democratic Party
Policy Research Council Chairman Hidenao Nakagawa, appearing on
Fuji TV yesterday, said: "It would be better to study jointly
(between Japan and South Korea) the problem of naming underwater
geological features." National Land and Transportation Minister
Kazuo Kitagawa stressed the setting up rules for maritime
research in negotiations on setting a boundary line for the EEZ.

14) Government to earnestly consider GSDF pullout from Iraq;
Foreign Ministry official: Critical stage is over with
designation of al-Maliki

YOMIURI (Page 2) (Full)
April 24, 2004

The government hails great progress made in Iraq's political
process, as seen in the designation of Jawad al-Maliki as its new
prime minister. The government plans to speed up preparations for
resuming yen loans to the country for the first time in about 20
years, as well as seriously considering a timeline for
withdrawing Ground Self-Defense Force troops from the southern
Iraqi city of Samawah, meaning that the stage is being set for a
pullout.

Following the designation of al-Maliki as the new Iraqi prime
minister, Foreign Ministry Press Secretary Yoshinori Katori
released a statement yesterday reading, "Japan welcomes his
appointment as a great stride toward the establishment of a new
government under national unity."

A senior Foreign Ministry official said:

"The most critical stage is now over for the establishment of a

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permanent government. We need to watch closely the process of
appointing new cabinet ministers. It should go smoothly, because
the transitional government has formed a cabinet once."

The government hopes to reach a formal agreement with a permanent
Iraqi government in May on the implementation of yen-loan
projects, including those for port improvement and irrigation,
worth about 76.5 billion yen. The government also intends to
invite to Japan senior Iraqi government officials, including top-
level leaders.

The government initially envisaged beginning a GSDF pullout in
late March and wrapping it up in May. But the timetable has been
slipping due to a delay in the establishment of a new Iraqi
government because of sectarian clashes. The government is
expected to issue an order to dispatch the 10th GSDF contingent
to Iraq later this month to replace the 9th contingent in late
May. A withdrawal may not begin until June or later. The
government is poised to determine a timeline for withdrawal while
watching the formation of a formal Iraqi government and other
factors.

15) Japan, Iran talks on nuclear development issue end in failure

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

By Takayuki Haruhi in Teheran

Middle East-Africa Bureau Director General Motoi Yoshikawa of the
Foreign Ministry met on April 22 in Teheran with Iran's vice
foreign minister for Asian affairs and other officials. The talks
centered on Iran's nuclear development issue, but ended along
divergent lines. Japan on April 11 expressed its regret that Iran
had announced its successful enrichment of uranium. The Iranian
government rebutted: "We will not change from our previous
position of using nuclear energy for peaceful use."

16) Japanese, US finance ministers discuss review of IMF quota
system to correct under-representation of emerging economies in
Asia

NIHON KEIZAI (Page 1) (Excerpts)
April 24, 2006

Masakuni Mizu, Washington

Finance Minister Sadakazu Tanigaki, currently visiting the US,
met with US Treasury Secretary Snow for about 30 minutes on the
afternoon of April 22, local time. During the meeting, the two
agreed to discuss a review of the International Monetary Fund's
(IMF) quota system used for allotting voting power. In the IMF,
the US and European countries have now strong clout. The proposed
revision is aimed to correct the current under-presentation of
emerging economies in Asia and other regions.

In a meeting of the IMF International Monetary Financial
Committee held prior to the finance ministerial, the participants
agreed to have the IMF senior director submit a revision plan
with an eye to the September annual assembly. In the Japan-US
finance ministerial, Snow, who was cautious about IMF reform,
also showed understanding.

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Should the IMF quota system be reviewed, emerging economies, such
as China and South Korea, will have increased voting power, while
that of some European countries will decrease. Such countries
will certainly raise objections to the proposed revision of the
quota system.

17) Second ban on US potato imports due to new finding of pests

TOKYO SHIMBUN (Page 3) (Full)
April 22, 2006

The Ministry of Agriculture, Forestry, and Fisheries (MAFF)
yesterday announced a ban on US potato imports, which had been
allowed with conditions, such as that imported products should be
used only for potato chips. The move follows the discovery of
pests at a farm in Idaho. The import embargo had been lifted only
a little over two months ago.

Japan had suspended US potato imports due to the breeding of
potato cyst nematodes, but the US called on Japan to import US
potatoes for potato chips from areas where such pests had not
been found. MAFF then lifted the ban on the imports of US
potatoes from 14 states, including Idaho for the February-June
period. Approximately 430 tons had thus far been imported.

However, following the finding of white potato cyst nematodes,
which are harmful to potatoes, in Idaho in April, MAFF decided to
suspend the potato imports from all over the US.

DONOVAN