DAILY SUMMARY OF JAPANESE PRESS 04/25/06

UNCLAS SECTION 01 OF 10 TOKYO 002237

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SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 04/25/06


INDEX:

(1) Japanese, US defense chiefs agree on Japan's share of 710
billion yen or 59% of total cost to move Marines to Guam

(2) Okinawa welcomes Japan-US agreement on cost sharing as a
"step forward"; Inamine on hot seat; Japan, US in final stretch
for producing final report

(3) Okinawa welcomes bilateral agreement on cost sharing for Guam
relocation; May affect Futenma relocation

(4) "US-Japan Alliance and Turbulent Northeast Asia" symposium:
CSIS senior vice president calls for acceleration of US force
realignment

(5) Editorial: Minshuto's victory in Lower House by-election to
bring tension back into politics

(6) Qatar planning to immensely increase LNG output holds key to
Japan's energy resource strategy

(7) "We will now get down to the work of lifting the US beef
import ban," says agriculture minister

(8) FTC releases report calling for fair competition

(9) Thoughts on income disparity (Part 1); Argument that
structural reforms have widened economic divide lacks grounds

(10) South Korean president's statement makes improvement in
strained Japan-South Korea relations more difficult

ARTICLES:

(1) Japanese, US defense chiefs agree on Japan's share of 710
billion yen or 59% of total cost to move Marines to Guam

SANKEI (Page 1) (Slightly abridged)
April 25, 2006

Defense Agency (JDA) Director General Fukushiro Nukaga visited
the US and reached an agreement with his US counterpart Rumsfeld
on Japan's share of the cost of relocating Okinawa-based Marines
to Guam. When he left for the US, no arrangement had been made
for a defense summit. Nukaga engaged in direct negotiations "with
his political life on the line."

Nukaga met US Defense Secretary Rumsfeld at the Department of
Defense on the night of April 23, local time. The two defense
chiefs agreed that Tokyo would pay 6.09 billion dollars (about
710 billion yen) of the total 10.27 billion dollars (about 1.21
trillion yen) cost. It is now highly likely that a conclusion
will soon be reached on the realignment of US forces in Japan as
Tokyo and Washington have already reached board agreement in
areas other than the Guam cost.

The two countries plan to hold a Japan-US Security Consultative
Committee meeting of defense and foreign ministers (2+2) in
Washington on May 2, in which both sides expect to formally agree
on the contents of a final report on US force realignment.

"Businessman" Ambassador Schieffer serves as stage assistant

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On the evening of April 23, US Ambassador to Japan Schieffer and
Deputy Undersecretary of Defense Lawless greeted Nukaga when he
arrived by car at the main entrance of the Defense Department.
Rumsfeld was not there.

When Nukaga left Tokyo on April 21, a meeting with Rumsfeld had
not been arranged. Although Rumsfeld proposed meeting him on
April 24 due to his planned business trip for the weekend, the
deadline for Nukaga was the evening of April 23 in view of the
Diet schedule.

It was feared that if no agreement was reached during Nukaga's
stay in the US, the 2+2 meeting on May 2 would be cancelled.
Despite such a possibility, Lawless, the responsible official on
the US side, had insisted: "Japan should pay 75% of the total 10
billion dollar cost." Judging that it would be impossible for
both sides to step away from their conventional positions in
working-level talks, Nukaga was determined to meet directly with
Rumsfeld.

It was Ambassador Schieffer who arranged the defense summit.
Making use of his close ties with President Bush, who used to be
his business partner, Schieffer took Rumsfeld out to meet Nukaga.

Many observers take the view that Schieffer played the role of
"stage assistant" to bring about the agreement on Japan's share
of the Guam relocation cost. The ambassador had been meeting
secretly with Nukaga over the past year. Japanese officials had

SIPDIS
high expectations of him, a senior JDA official remarking: "Since
he used to be a businessman, he is sensible in negotiations on
matters related to money."

Washington began to call on Japan to foot 75% of the 10 billion
dollars bill in early March. In response, Tokyo proposed a 30%
share in an attempt to lower the percentage to less than 50%. But
the US took an uncompromising position. On March 23, Liberal
Democratic Party (LDP) Executive Council Chairman Fumio Kyuma met
with Lawless and proposed that Japan would finance the
construction of housing for troops' families under a government
loan arrangement, saying: "Japan will find it difficult to obtain
public understanding for any plans to finance portions other than
those used also by Self-Defense Force troops, such as joint
training." Difficult negotiations were continuing even after
that, but early on the morning of April 11, when Nukaga met with
Chief Cabinet Secretary Shinzo Abe and Foreign Minister Aso in
the Diet building, Aso said:

"It is inconceivable that the US will agree to Japan's proposal
for a 50% share. I suggest that Japan and the US should disburse
one-third of the total cost each from their respective state
coffers and that Japan bear the remaining portion under a low-
interest loan arrangement."

The US had come up with this proposal first. Nukaga switched his
"trump card" to the formula of allocating the relocation cost to
Japan's fiscal spending, US fiscal spending, and the loan
formula. On April 20, Prime Minister Junichiro Koizumi told
Nukaga, who visited his official residence: "In order to
strengthen the Japan-US alliance and reduce Okinawa's base
burden, Japan will have to defray some of the cost." The prime
minister left the ultimate power of attorney in his hands.


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The meeting between Rumsfeld and Nukaga, for which two hours had
been set, lasted 3 hours and 15 minutes.

Key points in Japan-US agreement

Japan should pay 6.09 billion dollars or 59% of the 10.27
billion dollar cost to relocate Okinawa-based Marines to Guam.
The Japanese government should disburse 2.8 billion dollars
as expenses to construct barracks, a Marine command building,
schools, and the like; invest 1.5 billion dollars in a newly
established third-sector body for constructing housing for US
troops' families; and pay the remainder in loans as expenses
related to housing and social infrastructure, including
electricity and sewage facilities.
US should disburse 3.18 billion dollars from its coffers.

(2) Okinawa welcomes Japan-US agreement on cost sharing as a
"step forward"; Inamine on hot seat; Japan, US in final stretch
for producing final report

OKINAWA TIMES (Page 3) (Excerpts)
April 25, 2006

Okinawa residents are welcoming an agreement reached April 24
between Tokyo and Washington on the two countries' financial
contributions to the relocation of US Marines from Okinawa to
Guam. Now that the path for US force realignment has been laid
d
out, the two countries are certain to produce a final report that
would specify a plan to relocate the US Marine Corps' Futenma Air
Station to Camp Schwab in Nago. Okinawa Gov. Keiichi Inamine will
be soon pressed to make a tough decision.

An Okinawa official described the settlement of the Guam
relocation cost-sharing issue as a "major step" toward returning
US bases in the central and southern parts of Okinawa and
reducing 8,000 US Marines.

But the Futenma relocation issue still remains as a sticking
point. Although the Okinawa prefectural government has no
intention of accepting any new plan, it wants to avoid locking
horns with the central government because its cooperation is
essential in reutilizing vacated US military bases in the
prefecture.

In an April 20 press conference, Inamine described the Futenma
relocation agreement as a matter only the central government can
decide on. The governor has visibly softened his stance since
last October when he rejected the Japan-US interim report as
totally unacceptable. The prevalent view in Okinawa is that
Inamine will reject the two-runway plan and support instead a
plan to build a ground-based helipad at Camp Schwab.

Inamine is expected to convey Okinawa's position to Prime
Minister Junichiro Koizumi to reflect it in a new cabinet
decision once a final report is produced. In that instance, the
focus will be how far Inamine will press the government for
eliminating the danger of helicopters based at Futenma Air
Station.

(3) Okinawa welcomes bilateral agreement on cost sharing for Guam
relocation; May affect Futenma relocation


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ASAHI (Page 14) (Full)
Evening, April 24, 2006

Residents of Okinawa, who have been suffering from the excess
burden of US bases, are vocally welcoming news on an agreement
reached between Tokyo and Washington on sharing the cost of
relocating US Marines from Okinawa to Guam. The agreement will
set the relocation plan in motion. Yoritaka Hanashiro, director
of the Okinawa governor's executive office, said: "The transfer
of US Marine Corps headquarters would result in a smaller base
burden. I would like to give high marks to the cost-sharing
agreement that would push the relocation plan to that end." But
Hanashiro only said this about the specific shares of Japan and
the US, "I am not in a position to comment."

The Okinawa prefectural government has yet to give its consent to
the plan to relocate Futenma Air Station to Cape Schwab at Henoko
in Nago City. The agreement reached between Tokyo and Washington
on the Guam relocation cost is likely to have a subtle impact on
Gov. Keiichi Inamine's stance on the Futenma issue.

Mayor Tsuneo Chinen of Uruma, a city hosting Camp Courtney where
the 3rd Marine Expeditionary Force command is based, which will
be moved to Guam, said perplexingly: "Although the command is
scheduled to move to Guam, the central government hasn't shown us
anything. We don't know when the command will move and what will
happen to the base once the command is gone. There is no clear
guarantee of the status of those working at the base."

(4) "US-Japan Alliance and Turbulent Northeast Asia" symposium:
CSIS senior vice president calls for acceleration of US force
realignment

NIHON KEIZAI (Page 3) (Full)
April 25, 2006

A symposium titled "US-Japan Alliance and Turbulent Northeast
Asia" was held yesterday at the Nikkei Hall under the co-
sponsorship of the Nihon Keizai Shimbun and the US Center for
Strategic and International Studies (CSIS). CSIS Senior Vice
President Kurt Campbell, a former deputy assistant secretary of
defense, commented on Japan and the US having reached an
agreement on their financial contributions to the relocation of
US Marines from Okinawa to Guam: "US force realignment must be
accelerated in the future as well. It is not possible to rely
only on the US-Japan alliance for the defense of Asia." Campbell
underlined the need to split US forward deployment bases to
multiple locations, including Southeast Asia.

Senior CSIS Adviser Michael Green, a former member of the
National Security Council, called for implementation of the
agreement: "Although a variety of plans were issued on base
realignment, few were accompanied by action."

As a means to break the deadlock in the Yasukuni Shrine issue,
which has strained relations between Japan and China, Harvard
University Prof. Joseph Nye urged Prime Minister Junichiro
Koizumi and whoever succeeds him to refrain from visiting the
shrine, saying, "They have the right to visit the shrine, but
they must not exercise it. This way, Japan can rob China of its
diplomatic card." Nye also proposed a two-stage approach to
China, stating, "It is important to hedge (against crises) while
urging it to join the international system."

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Senior CSIS Adviser James Kelly, a former assistant secretary of
state, made this comment on the North Korean issue: "The Bush
administration is not aiming at regime change in North Korea."

In addition to the panelists, the symposium brought together
former US Undersecretary of State Arnold Kanter, Brookings
Institution Senior Fellow Richard Brooks, University of Tokyo
Graduate School Prof. Akihiko Tanaka, and Japan Center for
Economic Research Chairman Akira Kojima.

(5) Editorial: Minshuto's victory in Lower House by-election to
bring tension back into politics

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

Kazumi Ota, a former member of the Chiba prefectural assembly
member who was officially endorsed as a candidate by Minshuto
(Democratic Party of Japan),won a House of Representatives by-
election on Sunday in Chiba's No. 7 constituency. Minshuto's
victory is significant. Chances are now that President Ichiro
Ozawa will be reelected in the party leadership race in
September, and in the presidential election of the Liberal
Democratic Party (LDP) in September, whether candidates have a
strategy to take on Ozawa will likely become a major campaign
issue.

The by-election filled a Lower House seat vacant after an LDP
lawmaker quit to take responsibility for an election law
violation by his supporters. The main opposition party Minshuto,
which had been in internal disarray due to the bogus email
fiasco, recently elected Ichiro Ozawa as its new leader. The by-
election was the last state-level election under the leadership
of Prime Minister Junichiro Koizumi, who has announced that he
will leave office in September at the end of his term.

The first and last battle between Koizumi and Ozawa drew wide
attention among the public. It can be said that the Chiba No. 7
district, comprised of both urban and rural areas, is a miniature
version of the nation. The election pitted Ota against Ken Saito,
a candidate officially endorsed by the LDP and recommended by the
New Komeito. The race was regarded as a leading indicator to
forecast whether the emergence of a two-party system consisting
of the LDP and Minshuto be propelled forward in next summer's
House of Councillors election.

The LDP set the Koizumi reform drive as a major campaign issue,
but there are no clear issues since the resolution of postal
privatization. Moreover, the government's reform drive is not
being recognized for its positive effects but is seen as creating
a widening social gap. Such issues as a widening income disparity
and gender inequality became campaign issues in Sunday's by-
election in Chiba.

Ota, a former local prefectural assembly member, stressed she
would do her best to eliminate the losers in society and to
correct distortions created by the reform program. Saito, a
former trade ministry bureaucrat, stressed that he would make
efforts to continue to promote the reform policy. During the
campaign, he had to face up to hard criticism of the Koizumi
reforms.


TOKYO 00002237 006 OF 010


There was once a rumor that Minshuto would not field candidate
because of the email fiasco. With Ozawa's assumption of the party
presidency, the main opposition party was able to restore
internal unity. As a result, the party won Sunday's by-election.

The LDP has won all Upper and Lower House by-elections conducted
over the past two years, taking advantage of support from the New
Komeito, which is an extremely effective tool to garner votes in
by-elections, in which voter turnout is usually low. The New
Komeito obtained about 30,000 votes in the Chiba No. 7
constituency in last year's Lower House election (proportional
representation segment). However, Sunday's voter turnout was
49.63%, which was more than expected. As a result, this worked to
Ota's favor.

With the victory of the Minshuto candidate in the by-election,
Ozawa's grip on his party has strengthened. His political career
overshadows the careers of Taro Aso, Sadakazu Tanigaki, Yasuo
Fukuda and Shinzo Abe, who are regarded as leading LDP
presidential contenders. There is no mistake that Minshuto's
victory will help publicize Ozawa's pet argument that political
change is real structural reform. Finding a person capable of
competing with Ozawa will likely become a criterion of selecting
a successor to Koizumi as LDP president.

Minshuto will likely step up its stance of confronting the
government and ruling camp at the Diet, as Ozawa advocates,
replacing the stance of presenting counterproposals. In the final
stage of the ongoing Diet session, the focus will be on a bill to
hold a national referendum on the process of amending the
Constitution, as well as on a bill amending the Basic Education
Law.

There were many cases that the outcomes of by-elections have had
an impact on the political situation later. A typical example is
the Upper House by-election for Iwate prefecture in March 1987,
which created momentum to stop the introduction of a sales tax.

Minshuto's victory proves that the trend for the emergence of a
two-party system consisting of the LDP and Minshuto appeals to
the public. We welcome the return of tension in politics.

(6) Qatar planning to immensely increase LNG output holds key to
Japan's energy resource strategy

SANKEI (Page 3) (Excerpts)
April 24, 2006

Qatar, a country equivalent to Akita Prefecture in landmass, is
pursuing a plan to tremendously increase its production of
liquefied natural gas (LNG). The country may become the world's
largest LNG producer in several years. Qatar's goal is to
establish itself as a stable LNG supplier amid growing
international attention to natural gasses on the backdrop of
soaring oil prices.

In the country's capital city of Doha, an International Energy
Forum (IEF) was held April 23 by bringing together energy
ministers from about 70 countries.

A meeting of the Group of Seven finance ministers and central
bank governors held in Washington ended April 21 with the
issuance of a joint statement sounding an alarm against rising

TOKYO 00002237 007 OF 010


oil prices as a potential risk to the robust international
economy and calling for greater oil output, oil refinery
capability, and energy conservation. The IEF is a venue to
discuss all those issues. But Qatar, the host of the IEF, intends
to expand its natural gas supply to rewrite the global energy
map.

Qatari Second Deputy Prime Minister and Energy and Industry
Minister Attiyah said: "Our country will become a major global
power in the LNG-based chemical industry and the GTL (gas-to-
liquid) area.

In the year Qatar became an independent country, the Northfield
gas field was discovered in waters off the Persian Gulf, which
has 26 trillion cubic meters of reserves -- the third largest
following Russia and Iran.

The reserve is over ten times greater than the volume Japan
imports from Indonesia. It is also enough to support Japan's
natural gas consumption for 300 years.

LNG production began in 1996 in Ras Laffan Industrial City, built
on the Persian Gulf coast 80 kilometers north of Doha. Several
tens of thousands of workers from some 30 countries are engaged
in production there, which is now in its seventh term. Annual
production capability is expected to grow from the 6 million tons
in the initial stage to 77 million tons in the next five years.
The total investment would come to 2 trillion yen.

The annual global LNG production is estimated at 130 million
tons. Qatar's plan to increase the output by 70 million tons is a
gamble. But the country thinks the chances are in its favor.
Demand for natural gasses will overtake that for coal by 2020,
according to an estimate by an international organization. The
increased portion can be shipped in liquid form.

Japan has a long association with Qatar for LNG production.
Mitsui & Co. financed the first project during the 1990s, Chiyoda
Corp. built its facilities, and Chubu Electric Power Co. and
other firms concluded long-term purchase agreements.

On April 23, Economy, Trade and Industry Minister Toshihiro Nikai
and Qatari Second Deputy Prime Minister Attiyah signed a joint
statement at the IEF hall, demonstrating "honeymoon relations"
between the two countries. With a fierce LNG battle expected to
occur among major powers, Qatar is likely to hold a key to
Japan's energy strategy.

(7) "We will now get down to the work of lifting the US beef
import ban," says agriculture minister

NIHON KEIZAI (Page 3) (Full)
Evening, April 25, 2006

Meeting the press after a cabinet meeting, Agriculture, Forestry
and Fisheries Minister Shoichi Nakagawa said today that now that
the government had completed a series of town meetings with
consumers to exchange views on a resumption of US beef imports,
"We now want to get down to the work of summarizing (opinions
presented by consumers) and deciding whether to continue the
temporary halt (on imports) or lift it." He revealed his
intention to start working toward removing the embargo.


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Tokyo and Washington are scheduled to resume negotiations in
early May, when the US government is expected to complete the
inspection of meat packers that are authorized to export products
to Japan. The probability is that if they reach an agreement on
conditions for reinstating the beef trade, including the
implementation of prior inspections, the government will hold
another round of town meetings with consumers to exchange
opinions and then formally decide to resume US beef imports.

The government said that it would not make a political decision
on a resumption of US beef imports. Chances are high, though,
that it will aim at reaching a settlement before Prime Minister
Junichiro Koizumi visits the US in late June.

(8) FTC releases report calling for fair competition

ASAHI (Page 8) (Full)
April 22, 2006

Prior to the privatization of Japan Post in October of next year,
the Fair Trade Commission officially released a report yesterday
calling for equal terms for competition between the privatized
firm and private-sector rivals.

Should Japan Post, while remaining its monopoly in regular mail
delivery services, launch new businesses, such as international
parcel delivery, it will become difficult to secure a fair
competition environment, the report notes. The report stresses
that "the nation's postal services will be privatized in a truly
desirable way based on the philosophy of reform," if the terms
are set for newcomers to be able to compete with the privatized
firm on an equal footing.

The report calls for easing such strict requirements as setting
up 100,000 postal boxes for newcomers to start regular mail
delivery. It also seeks measures to enable other entities to use
Japan Post's mail delivery network.

(9) Thoughts on income disparity (Part 1); Argument that
structural reforms have widened economic divide lacks grounds

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

The argument that Japan's economic divide is widening has been
gaining ground. Many have pointed out that changes in the
corporate society, such as progress in deregulation and the
introduction of a performance-based pay system, and the ongoing
structural reforms are contributing to a widening of income
disparity. The Nihon Keizai Shimbun probed into whether income
disparity is really widening and the real problems about
disparities.

Lenient social allowance standards

Is income disparity widening? Economist Kotaro Komiya warned that
the widening income-disparity argument is taking on a life on its
own, noting that the definition of the term "income disparity"
and the way to measure the disparity are unclear. He questioned,
""Can a difference between those who are lazy and those who work
hard be called a disparity?" He insists that it would be
necessary to analyze the issue in a more detailed way.


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The Gini coefficient is a measure of inequality in income. The
indicator declined in the high-growth period, reflecting
equalized income. However, in a survey conducted by the Ministry
of Health, Labor and Welfare (MHLW),the latest Gini coefficient
for 2001 rose 0.0263 points to 0.4983 from the level three years
before. The survey results seemingly indicate that a gap between
haves and have-nots has widened as the distribution of income
became uneven.

However, looking at the specifics, an increase in elderly
people's households account for 64% of the rise in the Gini
coefficient. An increase in the number of elderly people tends to
push up the coefficient in any given age, because of a drop in
income, compared with the amount they earned when they were in
active service. A decrease in the number of members of one
household due to an increase in single-member households
accounted for 25% of the rise in the Gini coefficient. These two
factors alone account for 90% of the increase in the Gini
coefficient. Keio University professor Haruo Shimada stressed,
"It is completely wrong to say that structural reforms have
widened disparities."

Following various media reports that many students in Adachi
Ward, Tokyo, receive school expense subsidies from the local
government, that ward has become a symbol of growing poverty as a
result of the widening income disparity.

The national average of the ratio of school children receiving
such an allowance is 12.8% (fiscal 2004). In Adachi Ward, the
ratio stands at 42.5%, 2.6 times the level of 10 years ago. A
senior ward official said, "There are many small and medium-size
companies in the ward. The number of school children who receive
subsidies has increased due to the economic slump."

In Adachi Ward, four-member households of husband, wife and two
children with annual income up to 5.8 million yen are eligible
for school expense subsidies. This income level largely exceeds
that of the minimum income households who are exempt from paying
income tax. In a survey of the distribution of households by
income level conducted by the National Tax Agency in 2003, nearly
70% of salaried workers were categorized into the annual income
bracket of less than 5 million yen.

It is true that the socially vulnerable exist. A safety net is
also necessary. The number of recipients of social security
allowance has increased. However, who are poor enough to receive
such an allowance has yet to be proved.

Aftermath of retaining jobs for baby-boomer generations

There are, of course, disparities that cannot be overlooked.

According to a survey by the Internal Affairs Ministry, the Gini
coefficient of those under the age of 30 rose 0.017 points over
the past five years starting in 1999. The rate of the rise in the
Gini coefficient in this age bracket is higher than that of other
age brackets.

Companies have been forced to cut jobs due to the protracted
slump. They clung to vested interests by maintaining baby-boomer
generations' jobs at the cost of recruiting young people. The
concern now is a portion of such young people will remain as a
lost generation.

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This issue cannot be settled, just by discussing the disparity
issue. It is necessary to maintain the present economic uptrend
and create a flexible economy so that those who have failed can
try again.

(10) South Korean president's statement makes improvement in
strained Japan-South Korea relations more difficult

ASAHI (Page 2) (Excerpts)
April 25, 2006

Hayami Ichikawa, Seoul

South Korean President Roh Moo Hyun today issued a statement that
focused only on relations between his country and Japan for the
first time. The statement noted that dominion over the Takeshima
(Dokdo in South Korea) islets is "the symbol of South Korea's
independence and sovereignty." The president's logic is that if
South Korea secures the ownership over the islets, it will lead
to correcting Japan's wrong historical views. The statement can
be taken as declaring that South Korea will never be able to make
a friendly settlement with Japan as long as Japan continues to
claim sovereignty over Takeshima.

Japan analyzes statement as intended to domestic audience

In a speech, South Korean President Roh Moo Hyun said regarding
the Takeshima issue: "As long as Japan beautifies its past deeds
and continues to claim sovereignty, South Korea and Japan will
never be able to establish a friendly relationship." A government
official analyzed the remark as "intended for the domestic
audience." Meanwhile, a senior Foreign Ministry official said in
some bewilderment: "The positions of Japan and South Korea are
different. But the president said that because of their different
positions, it was impossible for both sides to establish a
friendly relationship. It is hard to understand his remarks."

DONOVAN