JAPANESE MORNING PRESS HIGHLIGHTS 05/12/06

UNCLAS SECTION 01 OF 10 TOKYO 002579

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SIPDIS

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SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 05/12/06

Index:

1) Top headlines
2) Editorials
3) Prime Minister's daily schedule

4) Former Chief Cabinet Secretary Fukuda meets Secretary Rice
in Washington

Defense and security:
5) Government to draft implementation plan now for Futenma base
relocation
6) With Futenma agreement concluded, Prime Minister Koizumi
focuses meeting with Okinawa governor on local economic measures,
such as jobs and use of reverted sites

7) New law will be needed for promotion of Okinawa's economic
development
8) Okinawa Gov. Inamine stresses need for economic development
package for Okinawa
9) Inamine adamant about not running for reelection as Okinawa
governor this fall
10) Koizumi in Diet reply says it is still difficult to put a
total price tag for Japan's share of USFJ realignment
11) Opposition camp in Diet critical about burden on Japan of
the USFJ realignment plan
12) Aspects of return of Yokota air space control to Japan are
still up in the air

13) Prime Minister, Upper House LDP leader Aoki agree on
extension of current Diet session, but how long to extend it must
be coordinated

14) Mori faction wants to remove outspoken lawmaker Ichita
Yamamoto, an Abe supporter, from its roles

15) Treasury Secretary Snow in telephone conversation with
Finance Ministry Tanigaki seeks to constrain Japan from
intervening to stop yen appreciation

16) Japan lauds OIE change in age-limit rule for regulation-free
international beef shipments to original formula of under 30
months

17) Government to propose Japanese-style energy conservation
system at Environment Forum to convey successful cases to China

Articles:

1) TOP HEADLINES

Asahi:
Okinawa governor meets with prime minister on Futenma relocation:
New law to be mulled to develop provincial districts;
Consultative organ involving Okinawa to be established

Mainichi:
Bid-rigging over sewage disposal; Managing company, co-managing
company had authority; Five leading companies alternate in those
posts every six months, exclusively receiving 64% of orders

Yomiuri:

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Nagaoka Post Office illegally discounts postage for metered mail;
More than 30 personnel to be disciplined

Nihon Keizai:
Communications Ministry mulling optional system for mobile phone
rates

Sankei:
Damage to murals at Takamatsuzuka tomb; Restorers did not wear
protective garments

Tokyo Shimbun:
Nationwide broadband network plan; Communications Ministry to
deal with break-even situation

2) EDITORIALS

Asahi:
(1) Futenma relocation: Okinawa governor makes difficult
decision
(2) Interest rate hike in US; Determination to correct imbalance
urged

Mainichi:
(1) USFJ realignment: Final coordination with Okinawa should be
undertaken in serious manner
(2) LDP presidential race: It is not necessary to line up behind
one candidate

Yomiuri:
(1) Futenma shift: Framework for pressing ahead with relocation
plan established
(2) US Interest rate increase: It is necessary to pay close
attention to sharp rise of the yen

Nihon Keizai:
(1) Implementation of US financial policy now at a difficult
stage
(2) High marks to Governor Inamine's policy change

Sankei:
(1) Futenma relocation: Realistic move by Okinawa deserves
praise
(2) Bird week: Learn a lesson from an increase in the number of
albatrosses

Tokyo Shimbun:
(1) Futenma relocation: There are still unfinished tasks
(2) Increase in number of people dying alone: Taking better care
of people

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, May 11

NIHON KEIZAI (Page 2) (Full)
May 12, 2006

10:10
Met at Kantei with Deputy Chief Cabinet Secretary Nagase,
followed by Vice Defense Minister Moriya.


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13:08
Attended Lower House plenary session.

14:59
Returned to Kantei.

16:05
Met with Okinawa Gov. Inamine, joined by Foreign Minister Aso and
Defense Agency Director General Nukaga.

18:30
Met with Upper House member Yoriko Kawaguchi.

19:07
Met at his official residence with Chief Cabinet Secretary Abe,
Administrative Reform Minister Chuma, Lower House Administrative
Reform Committee Chairman Ibuki, and committee directors from the
ruling parties.

4) Fukuda meets with US Secretary of State Rice

SANKEI (Page 5) (Full)
May 12, 2006

By Hiroyuki Kano, Washington

Former Chief Cabinet Secretary Yasuo Fukuda met in Washington
with US Secretary of State Condoleezza Rice for about 30 minutes
on the afternoon of May 10 (morning of May 11, Japan time). They
are believed to have discussed the Asia situation, including the
strained Japan-China relations, as well as the Middle East
situation, even though what they discussed has yet to be
unveiled. After the meeting, Fukuda told reporters, "We discussed
various issues."

Former US Ambassador to Japan Howard Baker and Japanese
Ambassador to the United States Ryozo Kato also attended the
meeting. Prior to his meeting with Rice, Fukuda exchanged views
with Asia experts from the Congressional Research Service (CRS).

5) Futenma relocation: Government to devise implementation plan;
Challenges, such as Okinawa's request for temporary heliport, lie
ahead for completion of relocation by 2014

NIHON KEIZAI (Page 3) (Excerpts)
May 12, 2006

The issue of relocating Futenma Air Station, a key element in the
realignment of US forces in Japan, has moved a step closer to
realization. Now that Okinawa Gov. Keiichi Inamine has reversed
his previous stance and effectively approved the airfield's
relocation to the coastline of Camp Schwab, the government aims
for a cabinet decision on May 19 to map out an implementation
plan, including a timetable for construction, through talks with
local communities. But the government's response to Okinawa's
request for a temporary heliport is still unclear. Hurdles still
remain for the realization of the Japan-US agreement to complete
the relocation by 2014.

Asked by reporters about the significance of the broad agreement
reached between the Defense Agency and Okinawa, Prime Minister
Junichiro Koizumi said last night, "It carries great

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significance," adding, "A cabinet decision must be made based on
a set of procedures."

According to a government source, a cabinet decision would be
made on a plan to build two 1,800-meter runways in a V-shape on
the coastline of Camp Schwab. Devising an implementation plan for
facilities and other specifics would follow coordination with the
US and local communities.

As a condition for accepting the relocation plan, Inamine
insisted on the inclusion of the "elimination of risks at Futenma
Air Station" in the agreement with the government. The government
must conduct environmental surveys in the eight years before the
alternative facility is completed in 2014. Inamine's request
reflects Okinawa's desire to relocate Futenma's helicopter unit
as soon as possible.

Okinawa has called for the construction of a temporary, easy-to-
build heliport on the land portion of Camp Schwab. But the
Defense Agency remains reluctant to accept the request for
financial reasons. Although the agency is planning to relocate
the helicopter unit to the alternative facility in stages even
while it is under construction, it remains to be seen if the US
military will approve such a plan.

6) Tokyo, Okinawa reach agreement on Futenma relocation; Prime
Minister Koizumi, "We'll respond to Okinawa with sincerity";
Tokyo to do its utmost for employment measures; Futenma plan
likely to get cabinet approval next week

YOMIURI (Page 1) (Full)
May 12, 2006

Prime Minister Junichiro Koizumi yesterday evening met with
Okinawa Gov. Keiichi Inamine at the Prime Minister's Official
Residence and confirmed the contents of an agreement recently
reached between the governor and Defense Agency Director-General
Fukushiro Nukaga on the relocation plan for the US Marine Corps
Futenma Air Station in Ginowan City, Okinawa Prefecture.
Following the basic agreement with Inamine, the central
government will seek cabinet approval as early as next week for
its policy of implementing the plans for the realignment of US
forces in Japan without falling behind the schedule.

The meeting came following the agreement reached yesterday
morning between the governor and JDA Director-General Nukaga on
advancing discussions between (Tokyo and Okinawa) basically in
line with the plan finalized by the Japanese and US governments
for relocating the Futenma airfield to a coastal area of Camp
Schwab in Nago City. The meeting was joined by Foreign Minister
Aso and Nukaga.

Gov. Inamine said, "Security affairs fall under the exclusive
control of the state," but added: "When there is the return of
land, there are very difficult problems to deal with, for
instance, how to use vacated land and employment of workers (at
US military facilities). I'd like the central government to deal
with matters that cannot be handed under the existing laws."
Inamine thus called on the central government to give due
consideration to how to use vacated land, as well as how to
secure employment for Japanese base workers, based on the
agreement between Tokyo and Washington on such plans as

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transferring Marines from Okinawa to Guam and relocating the
Futenma airfield. Koizumi told Inamine that the government would
address his request with sincerity, saying, "We on the part of
the central government would like to make every possible effort
to respond to your request." On the plan to open an Okinawa
Graduate University for Science and Technology in Onnason
Village, Koizumi said: "I will realize it at an early date in
order to raise the level of science in Japan."

7) With Okinawa governor's broad agreement to Futenma plan, prime
minister promises to take economic measures, including use of
vacated land, jobs for local employees

TOKYO SHIMBUN (Page 1) (Excerpts)
May 12, 2006

Okinawa Governor Keiichi Inamine reached an agreement with the
government to conduct further discussions based on the
government's plan to relocate the US Marine Corps' Futenma Air
Station in Ginowan to a coastal area of Camp Schwab in Nago.
Following the agreement, Prime Minister Junichiro Koizumi met
with Inamine at his official residence for about 15 minutes
yesterday afternoon and said: "The government will make utmost
efforts with sincerity" to take measures to revitalize the local
economy after the return of the US base to Japan, focusing on the
use of the vacated land and the reemployment of local base
workers.

Inamine told Koizumi that the prefecture would deal with the
Futenma relocation issue based on the government's plan,
remarking: "Although the prefecture has its own position on the
base issue, we also want to address the issue."

Inamine then asked Koizumi to take every possible measure for the
prefecture, including new legislation, saying: "The return (of US
military bases) involves such difficult issues as how to use the
vacated land and what to do with local base workers. Some of such
issues cannot be resolved under current laws. I would like you to
take this into consideration."

8-1) Prime Minister Koizumi meets with Okinawa Gov. Inamine on
Futenma relocation; Tokyo to consider new legislation for local
development, which will include plan for establishment of
consultative body joined by Okinawa

ASAHI (Top play) (Lead paragraph)
May 12, 2006

Prime Minister Koizumi yesterday met with Okinawa Gov. Keiichi
Inamine at the Prime Minister's Official Residence and the two
confirmed that Tokyo and Okinawa would continue consultations on
the planned relocation of the US Marine Corps Futenma Air Station
in Ginowan City, Okinawa Prefecture to the cape of Henoko in Nago
City in the prefecture, based on Tokyo's relocation plan. The
central government will obtain cabinet approval possibly next
week for its policy concerning the plans on the realignment of US
forces in Japan. Included in the policy will be a plan for
establishing a consultative body between relevant municipalities,
including Okinawa Prefecture. Tokyo will also announce a policy
of discussing a relevant bill on the US force realignment
regarding Japan's share of the cost for the relocation of US
Marines from Okinawa to Guam, as well as local promotion

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measures.

8-2) Inamine gives importance to economic stimulus measures;
Futenma relocation may stall depending on who wins November
Okinawa gubernatorial race

NIHON KEIZAI (Page 3) (Excerpts)
May 12, 2006

Okinawa Gov. Keiichi Inamine has softened his stance regarding
the Futenma relocation issue. He has apparently judged it wise to
push ahead with a package of economic stimulus measures,
including ways to utilize vacated US bases and creating jobs, in
tandem with the government's cabinet decision, to meet Okinawa's
strong calls.

"I am determined to accomplish anything that is possible in my
tenure of office," Inamine said to reporters in Tokyo yesterday.
He also described his broad agreement with the Defense Agency as
a big step forward.

There is some skepticism in the Okinawa business community about
chances for the conservative prefectural administration to
survive the gubernatorial election in November. It was necessary
for Inamine, who might not run in the race, to highlight his
achievements other than economic stimulus measures, such as ways
to improve the operation of the Japan-US Status of Forces
Agreement.

The agreement reached between Inamine and the Defense Agency has
drawn a mixed reaction from Okinawa. Chairman Kureya of the
Okinawa Construction Business Association noted: "The governor
made maximum concessions for eliminating risks at Futenma. A
speedy relocation will help save the construction industry."

Representative Miyazato of an Okinawa issues research group said
bitterly, "I had hoped the governor would oppose the Futenma
relocation. His about-face was a disappointment. It will have a
huge impact on the gubernatorial election in November, drawing a
strong backlash from Okinawa residents." In the event of a
reformist being elected governor, the relocation issue might
again stall.

9) Okinawa Gov. Inamine unlikely to run again

ASAHI (Page 1) (Full)
May 12, 2006

Okinawa Gov. Keiichi Inamine, 72, now serving his second term,
has decided not to run again in the gubernatorial election set to
take place as his term of office will expire in December. He will
likely announce his final decision about his course of action in
June, when the prefectural assembly is convened, but a process
for choosing his successor is likely to be accelerated down the
road. Inamine has previously told his aides: "I'd like to hand
over my mantle to someone." At a press conference after the
meeting yesterday between him and Prime Minister Koizumi on the
realignment of US forces in Japan, Inamine was asked about the
gubernatorial race. Referring to media reports, he made crystal
clear his intention not to run for a third term, saying: "People
already understand my basic thoughts on the matter."


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10) Prime Minister in Diet reply: "Specifying Japan's share of
total US realignment cost is difficult"

NIHON KEIZAI (Page 2) (Excerpts)
May 12, 2006

In a House of Representatives plenary session yesterday, Prime
Minister Junichiro Koizumi stated regarding Japan's share of the
total cost of relocating US forces in Japan: "We will closely
examine the details of Japan's share, so it is difficult to
present a specific figure at present." On the 26 billion dollars
(approximately 3 trillion yen) that US Deputy Under Secretary of
Defense Lawless estimated as Japan's share, the prime minister
only said: "We have yet to reach agreement on any specific
amount."

Defense Agency Director General Fukushiro Nukaga also stopped
short of mentioning any concrete cost, just saying: "While taking
the nation's current austere fiscal situation into consideration,
we would like to closely examine details with the US and then
coordinate views with the relevant government agencies."

Minshuto (Democratic Party of Japan) member Koichi Takemasa
stated regarding the estimate presented by Lawless: "I was
stunned. It is a problem that not the Japanese government but a
US ranking official presented the estimate." He then questioned
if it is necessary for Japan to bear a huge share of the
realignment cost."

11) Opposition camp criticizes Japan's burden for US force
realignment in Lower House plenary session

YOMIURI (Page 4) (Full)
May 12, 2006

The Lower House plenary session yesterday conducted a question-
and-answer session on the final report on the realignment of US
forces in Japan. Taking up the fact that US Deputy Defense Under
Secretary Richard Lawless had estimated at one point Japan's

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share for US force realignment, including the relocation of
Okinawa-based Marines to Guam, at 26 billion dollars (2.886
trillion yen based on the exchange rate of the fiscal 2006
budget),Koichi Takemasa of the opposition Minshuto (Democratic
Party of Japan) asked for a concrete explanation, saying in a
strong tone, "We are angry about having been pressed for a huge
burden under the country's tight financial situation."

Prime Minister Koizumi replied:

"The government was not aware in advance what Mr. Lawless would
announce. We will closely examine necessary expenses, and it is
difficult at this point to present the total amount clearly."

12) Airlines ask for early return of Yokota RAPCON; "If Yokota's
big wall is removed, lower airfares and faster flights will be
possible"

YOMIURI (Page 38) (Excerpt)
May 12, 2006

As part of the realignment of US forces in Japan, it has been
decided to return a portion of the radar approach control

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(RAPCON) at the US Yokota Air Base to Japan by September 2008.
Prompted by this decision, the Scheduled Airlines Association of
Japan (SAAJ),consisting of 11 domestic airlines, yesterday
submitted a petition calling for an early return of RAPCON to the
Ministry of Land, Infrastructure, and Transport (MLIT) and other
government offices. According to an MLIT official, the so-called
Yokota RAPCON, which puts restrictions on commercial flights, has
been called a "big wall standing in airspace west of Tokyo" by
airline officials for many years. SAAJ looks to the return,
saying: "The return (of RAPCON) will bring about efficient
flights, less fuel consumption, and the easing of air gridlock."

13) Koizumi, Aoki agreed on May 8 to extend Diet session;
Coordination underway on length of extension

NIHON KEIZAI (Page 2) (Full)
May 12, 2006

Prime Minister Junichiro Koizumi and Mikio Aoki, chairman of the
Liberal Democratic Party (LDP) caucus of the House of
Councillors, agreed on May 8 to extend the term of the current
Diet session, which will end on June 18, it was learned
yesterday. The two had reportedly concealed their decision out of
fear of possible boycotts of deliberations on key bills by the
opposition camp.

According to senor LDP members, Koizumi and Aoki have agreed to
significantly extend the session in order to pass a bill revising
the Basic Education Law through the Diet during the ongoing
session.

Aoki and former Prime Minister Yoshiro Mori reached an agreement
in a meeting on May 7 to aim at enacting the legislation during
the current Diet session.

The focus is now on how many days the session should be extended.
The decision will likely be made just before the current regular
session is over after watching closely the development of
deliberations on important bills.

14) Former Prime Minister Mori urges Ichita Yamamoto to resign
from faction

SANKEI (Page 5) (Full)
May 12, 2006

In a general meeting of his faction yesterday, former Prime
Minister Yoshiro Mori of the Liberal Democratic Party (LDP) urged
House of Councillors member Ichita Yamamoto, who has openly vowed
to support Chief Cabinet Secretary Abe in the upcoming LDP
presidential race, to withdraw from the faction, saying:

"It's not good for Mr. Abe (because he has yet to announce his
candidacy for the election). You will kill him with kindness. I
warned you the other day, saying, 'You should remain in calm.'
But today I urge you to withdraw (from the faction)."

After the meeting, Yamamoto reacted strongly, saying:

"I cannot understand that it is not good to speak up that Mr.
Abe, an ace of our faction, is appropriate to be the next prime
minister. There is no reason for me to give up my membership of

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the faction."

Abe called Yamamoto in the Prime Minister's Official Residence
and said to him, "If there are misunderstandings, I want you to
make efforts to clear them up."

15) US Secretary of Treasury constrains Japan during telephone
dialogue with Tanigaki; Alarmed about yen-selling intervention

SANKEI (Page 9) (Full)
May 12, 2006

It was learned yesterday that Finance Minister Sadakazu Tanigaki
and his US counterpart John Snow talked on the phone. According
to a government source, the two financial chiefs exchanged views
on exchange rates, as the yen is now strong against the dollar.
Snow reportedly urged Japan not to sell yen and buy dollars in an
effort to prevent a sharp rise in the value of the yen. He made
this move, bearing in mind the US auto industry, which favors a
weak-dollar trend.

Vice Finance Minister Hosokawa during yesterday's regular press
briefing said, "I would like to refrain from making a comment on
the telephone talks," but he added: "The Finance Ministry makes
contact with cabinet ministers of the G-7 nations and to exchange
information and views as occasion."

Commenting on the exchange market, where the yen is gaining
further ground, Hosokawa hinted at the possibility of intervening
in the market to constrain the yen's sharp rise. He explained:
"Finance ministers and central bank governors from the Group of
Seven nations in a statement issued in April reaffirmed their
position that exchange rates should reflect the economy's basic
conditions. We are closely watching the movements of exchange
rates and will take appropriate measures when needed."

16) OIE withdraws initial proposal for free trade in boneless
meat

ASAHI (Page 8) (Full)
May 12, 2006

It was learned yesterday that the World Organization for Animal
Health, known as OIE, has withdrawn its initial proposal for
removing restrictions on trade in boneless beef. The OIE is
drafting a new proposal to reinstate the age limit of 30 months
for boneless beef and intends to present it at its annual meeting
to start on May 21 in Paris.

In its meeting last year, the OIE adopted a new international
standard to allow boneless beef from cattle 30 months of age or
younger to be traded without restrictions. This year, the
organization decided to further ease the regulation to remove the
age limit of 30 months and notified Japan and other member
countries of the new proposal. In a press conference yesterday,
Agriculture, Forestry, and Fisheries Vice Minister Mamoru
Ishihara welcomed the OIE's withdrawal of the proposal.

17) Government to propose Japanese-style energy conservation
system at Environment Forum to convey successful cases to China

MAINICHI (Page 2) (Full)

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May 12, 2006

The government yesterday decided to propose a Japanese-style
energy conservation method to China during the Japan-China Energy
Conservation and Environment Forum to be held in Tokyo starting
on May 29. Specific proposals include legislating energy-saving
guidelines set by each government agency and introducing tax
incentives for the promotion of energy conservation. The sharp
increase in energy consumption in China is said to be a reason
for soaring crude oil prices and environmental pollution. The
government wants to help China conserve energy by conveying
Japan's successful cases.

China released a mid- to long-term energy conservation plan in

2004. It has also established a number of energy conservation-
related laws. However, since there are no specific numerical
targets and a monitoring system has not been established yet, its
energy efficiency remains at one-ninth of the level achieved by
Japan.

For this reason, Japan will work on China to introduce a Japanese-
style energy conservation method, by showing actual examples,
including the standardization of numerical energy-conservation
targets, a system Japan introduced in the 1970s, learning a
lesson form the oil crises at that time.

SCHIEFFER