JAPANESE MORNING PRESS HIGHLIGHTS 05/26/06

UNCLAS SECTION 01 OF 10 TOKYO 002920

SIPDIS

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SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 05/26/06


Index:

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

Political agenda:
4) Prime Minister Koizumi getting special treatment from
President Bush in US visit
5) Government, ruling camp agree that Diet session will close
before Koizumi's visit to US with some key bills stalled
6) Minshuto head Ozawa, SDP head Fukushima agree to jointly
attack government, ruling camp on US beef issue, conspiracy bill
in the Diet
7) Chairman of LDP constitutional panel would like to revise
the war-renouncing clause of Article 9 in amending the
Constitution
8) Administrative reform bill to pass the Diet today
9) LDP's Komura wants Yasukuni Shrine to voluntarily remove
Class-A war criminals from its enshrined soul list
10) 20 junior LDP lawmakers form group supporting Abe as LDP
president
11) Tsushima faction's junior members would support JDA chief
Nukaga as LDP candidate if Mori faction splits on candidates Abe,
Fukuda

Diplomatic agenda:
12) Pacific Islands Summit which opens in Okinawa today offers
Japan chance to strengthen ties with countries friendly to it,
counter China's moves in the region
13) Assistant Secretary Hill discusses North Korea with Chinese
officials in Beijing, cancels trip to Japan
14) State Department spokesperson calls on Japan to consider
imposing financial sanctions on Iran over nuclear issue
15) Chinese government spokesperson praises Foreign Minister Aso
as a "partner"

Defense and security agenda:
16) JDA chief Nukaga, India's defense minister agree to urge
China to increase transparency of its arms spending
17) In order to pay its share of USFJ realignment, government
will cut procurement under the Chukibo (five-year defense
spending plan)
18) Coordination still stalled in government over finalizing the
cabinet decision on USFJ realignment

Articles:

1) TOP HEADLINES

Asahi:
Social insurance office in Mie to be sacked for improper waiver
of pension premium payments

Mainichi:
Education Ministry to require incumbent teachers to renew license

Yomiuri:
Survey shows NEETs, part-timers to be antisocial

Nihon Keizai:
Major high-tech firms raising R&D outlays to record 3.5 trillion

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yen in total for fiscal 2006

Sankei:
Tokyo to reach policy accord with London

Tokyo Shimbun:
More than 70,000 insurance offices in 15 prefectures involved in
illegal pension premiums payment waivers

2) EDITORIALS

Asahi:
(1) LDP presidential race ready to kick off
(2) New Keidanren chairman expected to demonstrate international
caliber

Mainichi:
(1) Expectations placed on Fukuda's candidacy
(2) Social Insurance Agency may destroy pension system

Yomiuri:
(1) Government, Minshuto should find common ground on amendment
to Basic Education Law
(2) Keidanren Chairman Mitarai faces task of rebuilding
corporate ethics

Nihon Keizai:
(1) Reconstruct pension-premiums-collection system from
foundation
(2) Don't allow WTO negotiations to be derailed

Sankei:
(1) China's military buildup may collapse balance
(2) Keidanren Chairman Mitarai urged to establish corporate
governance

Tokyo Shimbun:
(1) At Island Summit, listen to voices from small islands
(2) Account settlements: Clients taking tough look at banks

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, May 25

NIHON KEIZAI (Page 2) (Full)
May 26, 2006

08:15
Met Deputy Chief Cabinet Secretary Suzuki at Kantei.

09:00
Attended a meeting of the Upper House Special Committee on
Administrative Reform.

12:02
Arrived at Kantei.

13:00
Attended a meeting of the Upper House Special Committee on
Administrative Reform.

17:31

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Met at Kantei with former Prime Minister Hashimoto, who is a
member of the Japan-Arab Dialogue Forum, Nippon Keidanren (Japan
Business Federation) Vice Chairman Kenji Miyahara, and others.

18:03
Met Upper House member Yoriko Kawaguchi.

18:47
Attended a dinner party hosted by the international exchange
conference "The Future of Asia" at Hotel Okura.

19:38
Arrived at Kantei.

20:35
Went to residence.

4) US President Bush to visit Presley's residence along with
Prime Minister Koizumi

YOMIURI (Page 2) (Full)
May 26, 2006

Fumi Igarashi, Washington

US President Bush plans to show unusually great hospitality to
Prime Minister Koizumi, who is to travel to the United States
starting on June 28. Bush intends to highlight the good
relationship between the leaders and also play up Japan as an
ally, apparently making a clear distinction with Chinese
President Hu Jintao's visit to the US in April.

In his address in Pennsylvania on May 24, Bush highlighted his
close ties with Koizumi, portraying him this way: "He's an
interesting man. He loved Elvis and loves him even now."

The prime minister will hold a summit with the president on June

29. The White House is making arrangements to treat the prime
minister as a state guest, for instance, planning a welcome event
on the South Lawn, a welcome dinner hosted by the president, and
using the Blair House for the prime minister to stay. On June 30,
the prime minister is scheduled to visit Elvis Presley's
residence at Memphis, Tennessee. There is even the speculation
that the president will fly aboard Air Force One to visit there
along with the prime minister.

5) Government, ruling coalition plan to end current Diet session
before Koizumi's US visit

MAINICHI (Page 1) (Abridged slightly)
May 26, 2006

The government and ruling parties yesterday launched coordination
in the direction of extending the ongoing Diet session, which
ends on June 18, for about a week until June 27 when Prime
Minister Junichiro Koizumi leaves for Canada and the United
States. Koizumi will visit Canada and the US from June 27 to July

1. Of important bills, they intend to pass an administrative
reform promotion law and a set of bills to reform the medical
system through the Diet during the current session. The outlook
is that it will be extremely difficult to enact a bill to revise
the organized crime law that would make "conspiracy" a crime, and

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a bill to amend the Basic Education law into law during the
ongoing Diet session.

Although the ruling coalition had called for a lengthy extension
of the current Diet session, Koizumi remained reluctant to do so.
The LDP's coalition partner New Komeito has sought the enactment
of the education reform bill during the current session, but the
view that there is no choice but to carry the bill over to the
next session has gained ground, so calls for extending the
session substantially gradually disappeared.

Koizumi seems to have the view that it is wise to direct public
attention to September's Liberal Democratic Party presidential
election, by not extending the current Diet session, so that
presidential candidates will be able to conduct their campaigns
earlier.

The administrative reform promotion bill will be adopted today at
a House of Councillors plenary session. The government and ruling
camp see that it will be difficult to get the medical system
reform bill through the Diet during the current session as the
main opposition party Minshuto (Democratic Party of Japan) and
Social Democratic Party have refused to attend Lower House
deliberations in defiance of the ruling coalition's forced vote
on the bill.

Although a House of Representative special committee started on
deliberations on the education reform bill, chances are that the
bill will be carried over to the next session. It is also
difficult to enact a national referendum bill into law during the
current Diet session. Both ruling and opposition parties will
submit their own referendum bills to the Diet today.

6) Opposition parties to form united front to attack conspiracy
bill, US beef imports; Ozawa, Fukushima meet

TOKYO SHIMBUN (Page 2) (Full)
May 26, 2006

Ichiro Ozawa, head of the Democratic Party of Japan (DPJ =
Minshuto),and Mizuho Fukushima, head of the Social Democratic
Party (SDP) yesterday evening met at a Tokyo hotel and agreed to
strengthen a joint struggle by the opposition parties in order to
prevent the resumption of US beef imports, which Tokyo and
Washington have recently agreed on in principle.

They agreed to undertake coordination to hold a meeting of four
opposition party heads with the aim of strengthening cooperation
also with the Japanese Communist Party and the People's New
Party/

Commenting on the Upper House election in the next summer, Ozawa
during the meeting called on anti-LDP and New Komeito forces to
join forces, noting: "If you know good candidates, do not
hesitate to recommend. We can field candidates from outside our
party." The secretaries general of the DPJ and the SDP were also
present at the meeting.

7) LDP Constitution Research Commission chairman would like to
revise war-renouncing clause

TOKYO SHIMBUN (Page 2) (Full)

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May 26, 2006

Hajime Funada, chairman of the LDP Research Commission on the
Constitution, yesterday gave a speech at the LDP headquarters. In
it, he restated his thinking that the party's new constitution
draft, formulated last November, should be drastically revised.

The draft has left war-renouncing Clause 1 of Article 9 intact.
Funada indicated his desire to revise that clause, noting, "I
want to see this clause discussed and strengthened." He made this
speech out of consideration to some members of his party who
think that there is the possibility of the right of collective
self-defense not being authorized under the draft constitution.

Funada also called for mentioning the exercise of the right of
collective self-defense in the draft. He then added, "I would
like to have the Diet revise the Constitution on its own
responsibility within three years at the earliest or within five
years at the latest."

8) Administrative reform bill to obtain Diet approval today

YOMIURI (Page 2) (Full)
May 26, 2006

The Upper House Special Committee on Administrative Reform
yesterday adopted by a majority from members of the Liberal
Democratic Party and the New Komeito five administrative reform-
related bills, including administrative reform promotion
legislation, which the Koizumi administration has characterized
as the most important bill in the current Diet session,. The set
of bills will be approved and passed into law at the Upper House
plenary session this morning.

The Democratic Party of Japan (Minshuto) opposed the
administrative reform promotion bill, but supported three public
utility corporation system reform-related bills and the public
service reform bill (market testing bill). The Japanese Communist
Party and the Social Democratic Party opposed all the bills.

During a summary interpellation prior to the adoption, Prime
Minister Koizumi played up his determination to continue to
tackle structural reforms, noting: "This is not the end of my
administrative and fiscal reform efforts. There is no pause in
politics. There is no end for reform."

9) LDP's Komura: Yasukuni Shrine should voluntarily remove Class-
A war criminals

MAINICHI (Page 5) (Excerpt)
May 26, 2006

Former Foreign Minister Masahiko Komura, in a meeting yesterday
of his faction, expressed hope that Yasukuni Shrine would
voluntarily unenshrine Class-A war criminals. He said: "In order
to avid a situation in which a matter of the heart becomes a
diplomatic issue, I would be glad to see Yasukuni Shrine not
honor war leaders."

Komura expressed his concern, saying:

"Politicians cannot instruct or order religious organizations. I

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am greatly concerned that Yasukuni Shrine will be unable to
remain a national war memorial facility if the present situation
continues."

10) Group of 20 junior LDP lawmakers supporting Abe to be formed

MAINICHI (Page 2) (Excerpt)
May 26, 2006

Junior lawmakers of the ruling Liberal Democratic Party (LDP),
who have decided to support Chief Cabinet Secretary Shinzo Abe in
the upcoming party presidential election, held a meeting
yesterday at party headquarters. They decided to form on June 2 a
parliamentary group to support him. The group will be made up of
totaling 20 lawmakers from six factions of the LDP and members
belonging to no faction. This will be the first cross-factional
group to be formed to support Abe's candidacy.

11) Junior Tsushima faction members might field Nukaga in LDP
presidential race if Mori faction unable to run single person as
its candidate

MAINICHI (Page 2) (Full)
May 26, 2006

Defense Agency Director General Fukushiro Nukaga, a member of the
Tsushima faction of the Liberal Democratic Party (LDP),dined

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last night with Toshimitsu Motegi, chief secretary general of the
faction and former state minister in charge of science and
technology and IT policy, as well as with House of Representative
members of the faction, who are now serving in their first to
fifth term in the Diet. In the session, they agreed that the
faction should field its own candidate if multiple candidates run
in September's LDP presidential race due to a possible failure of
the Mori faction to select only one candidate.

A participant in the dinner was quoted as saying that they
confirmed that both Chief Cabinet Secretary Shinzo Abe and former
Chief Cabinet Secretary Yasuo Fukuda from the Mori faction may
run in the election. However no names were mentioned as a
candidate of the Tsushima faction during the dinner. Since the
lawmakers at the dinner appear to share the view that Nukaga is a
future presidential candidate, there is a possibility that the
Tsushima faction may call on Nukaga to run in the election.

SIPDIS

12) Japan will enhance friendship with pro-Japanese nations at
Pacific Islands summit set to open today in Okinawa, seeks to
counter China's approaches to those nations

NIHON KEIZAI (Page 2) (Almost full)
May 26, 2006

The Pacific Islands Summit will kick off today in Nago City,
Okinawa Prefecture, on a two-day schedule. Participating in the
conference will be Prime Minister Junichiro Koizumi and leaders
of the 14 member countries and two member regions of the Pacific
Islands Forum (PIF). Most of those nations are said to be pro-
Japanese, but China has suddenly been making approaches to them
recently. Koizumi, in part to counter China, wants to strengthen
friendship with those nations.

"We are all friends who share the largest peaceful ocean in the

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world called the Pacific, and we will develop together." Foreign
Minister Taro Aso made this remark during a welcome reception for
the PIF leaders held at the Foreign Ministry Iikura State Guest
House on May 25 prior to the start of the Pacific Islands Summit.

All the 12 islands nations that are to participate in the Islands
Summit, including Fiji and Tonga, are supporters of Japan's bid
for a permanent seat on the United Nations Security Council. The
Japanese government has expected them to play the role of a
"cheering squad" for Japan's own diplomacy by continuing to host
this sort of summit every three years.

The Japanese government is concerned about a rising China.

This April, the first "China-Pacific Islands Nations Economic
Development Cooperation Forum" was held in Fiji under the
sponsorship of China. Chinese Premier Wen Jiabao and other
leaders took part in the summit and announced that China will
offer the region a total of 3 billion yuan or some 42 billion yen
over the next three years. If China's presence increases in the
region, Japan might see its own influence weaken.

Tokyo intends to increase its official development assistance
(ODA) to 40 billion yen or more over the next three years.
Japan's strategy is to enhance the quality of aid, for instance,
personnel training, so as to make clear the differences in aid
between Japan and China.

13-1) Hill: North Korea not ready to return to six-party talks

MAINICHI (Page 3) (Full)
May 26, 2006

Shuji Nishioka, Beijing

US chief delegate to the six-party talks on the North Korean
nuclear issue Assistant Secretary of State Christopher Hill held
talks with his Chinese counterpart Wu Dawei in Beijing yesterday.
After the talks, Hill indicated to the press that there has been
no change in North Korea's stance of conditioning its return to
the multilateral talks on a removal of US financial sanctions,
saying: "North Korea is not ready to return to the negotiating
table." Meanwhile, a Chinese Foreign Ministry spokesman brushed
aside criticism that China has not made sufficient effort,
saying, "Such a view is unacceptable"

13-2) Hill cancels Japan visit

MAINICHI (Page 3) (Full)
May 26, 2006

Washington, Kyodo

US Assistant Secretary of State Christopher Hill has called off
his planned visit to Japan from May 26, a State Department
official said on May 25. As the reason, the official cited failed
efforts to coordinate a timetable for talks with Foreign Ministry
Asia and Pacific Affairs Bureau Director General Kenichiro Sasae.

14) US urging Japan to consider financial sanctions against Iran

ASAHI (Page 4) (Full)

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May 26, 2006

US Department of State spokesman McCormick said in a press
conference on May 24 that the US has asked Japan and other
countries to consider financial sanctions against Iran over its
nuclear development program. Citing Japan and Italy as countries
that have trade relations with Iran, the spokesman said that
their cooperation would be significant in imposing sanctions on
Iran.

15) China's Foreign Ministry recognizes "Aso as an important
partner"

TOKYO SHIMBUN (Page 2) (Full)
May 26, 2006

Norihiro Shinkai, Beijing

At a regular press conference yesterday, Chinese Foreign Ministry
Spokesman made this comment on the Japan-China foreign
ministerial meeting held in Doha, Qatar: "Foreign Minister (Taro)
Aso is an important partner for improving and making progress in
China-Japan relations. The meeting this time was beneficial and
we have a positive opinion of Japan's attitude." The spokesman
gave high marks to the contents of the recent foreign ministerial
with Aso.

China is apparently trying to win Aso over to its side as he is
said to be among the contenders to succeed Prime Minister
Koizumi, although until recently Chinese media criticized Aso as
a hard-liner toward China. As the reasons why China has now
valued Aso, Liu said, "Both sides have now shared the need for
China and Japan to make efforts to remove obstacles standing in
the way of improvement and development of relations," indicating
that Japan has recognized the importance of resolving the
Yasukuni issue through the meeting this time.

16) Japanese, Indian defense chiefs release document calling for
transparency in China's military affairs

TOKYO SHIMBUN (Page 2) (Full)
May 26, 2006

Defense Agency (JDA) Director General Fukushiro Nukaga yesterday
evening met with Indian Defense Minister Pranab Mukherjee at the
JDA and they signed a document for a joint release. The document
included the adoption of anti-terrorism measures and the
prevention of the proliferation of weapons of mass destruction as
joint goals, as well as the promotion of confidence building in
Asia, including striving for more transparency. The document,
though it refrained from singling out China, has in mind the
movements of that nation, which is pushing forward military
modernization.

The document pointed out that Japan and India share the same
values regarding democracy and human rights. It stressed the need
for close bilateral cooperation to pursue joint targets, such as
taking anti-terrorism measures, promoting transparency, securing
maritime traffic safety and extending disaster relief operations.

17) Government to review mid-term defense program, eyeing
spending cuts to squeeze out funds for US force realignment plans

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ASAHI (Page 2) (Full)
May 26, 2006

The government has decided to include a policy to review the
current mid-term defense program (Chukibo, worth 24.24 trillion
yen, covering the 2005-2009 period) among new cabinet decisions
in preparation for implementing US force realignment plans in
accordance with the final agreement reached between Japan and the
US. To secure financial resources for the plans, the government
aims to use the defense budget more effectively and reduce
spending on front-line equipment, including tanks and destroyers.

The government will decide the scale of spending cuts related to
the mid-term program after calculating realignment costs. The
government will start reviewing the current program in fiscal
2008, but the Finance Ministry is calling for reviewing it ahead
of schedule.

According to estimates, it would cost 6.09 billion dollars (about
685 billion yen) for relocating Okinawa-based Marines to Guam and
1.5 to 2 trillion yen for relocating US military facilities
within the nation, such as the US Marine Corps' Futenma Air
Station. As it stands, a huge amount of money will be needed, so
the Defense Agency (JDA) hopes that the expenses will be paid
separately from the JDA budget (about 4.8 trillion yen for fiscal
2006).

Finance Minister Tanigaki, however, indicated in a Diet reply
that the ministry would trim the JDA budget, remarking: "We will
try to make defense-related spending more efficient and
streamlined. We will take some measures to avoid the costs needed
for US force realignment from being added to the budget for the
mid-term program." A senior government official also said
yesterday: "The government will neither set up a special fund for
the full amount of expenses nor pay for it from the defense
budget." He thus indicated that the Finance Ministry intends to
squeeze some part of the realignment costs from the JDA budget.

18) Defense Agency struggling to get cabinet approval of US force
realignment; Compromising stance toward Okinawa drawing fire from
within government

SANKEI (Page 2) (Abridged)
May 26, 2006

The Defense Agency is engaged in coordination with Okinawa in
preparing its cabinet decision on May 30 that would implement US
force realignment plans. In a bid to win Okinawa's concurrence,
the agency has suggested a cabinet decision specifying an Okinawa-
proposed temporary heliport plan for the relocation of Futenma
Air Station. But objections are strong in the government to
making a cabinet decision not reflecting the Japan-US agreement.
Chances are growing that cabinet approval will slip to June.

Futenma

The Defense Agency initially aimed for cabinet approval on May
16, envisaging the presentation of US force realignment promotion
bills to the Diet in the current session.

But Prime Minister Junichiro Koizumi raised a red flag toward

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making a hasty decision. The agency was forced to put off the
planned cabinet approval, as Okinawa also called for its
postponement until after the Pacific Islands Summit that would
begin in the prefecture on May 26.

The Defense Agency and the Defense Facilities Administration
Agency presented Okinawa and Nago with a "Defense Agency plan"
outlining the construction of Futenma alternative facilities in
"waters near Cape Henoko, Oura Bay, and Henoko Bay," with V-
shaped two runways at Camp Schwab in mind.

The plan drew a strong backlash from Okinawa. Governor Keiichi
Inamine, who exhibited his tolerance toward the government plan
on May 11, demanded a revised Defense Agency plan, calling for a
temporary heliport on the land portion of Camp Schwab.

The Defense Agency is leaned toward making concessions. For
cabinet approval, the agency is considering wording flexible
enough to suggest the government's willingness to study a
temporary heliport based on the government plan.

But many LDP lawmakers fear that cabinet approval of
implementation plans devoid of a V-shaped runway plan will draw
fire from the US government. The government is struggling to make
a decision with an eye on relations with the United States.

Midterm Defense Buildup Program

The government and the ruling coalition are casting a cold gaze
at the Defense Agency's compromising posture party because the
agency has been making coordination with Okinawa independently.
The Cabinet Office, which has jurisdiction over Okinawa stimulus
measures, is particularly displeased with the agency's lack of
efforts to consult with it until recently.

Coordination is underway to include in a cabinet decision a
review of the Midterm Defense Buildup Program (FY 2005 - 2008;
24.24 trillion yen) outlining the Self-Defense Forces' five-year
equipment plans. The step reflects the Finance Ministry's
eagerness to secure financial resources for US force realignment.
But the SDF is showing strong aversion to a review of the defense
buildup program. There is the view in the SDF that the defense
buildup program is unconnected with US force realignment, which
would begin on a full scale several years later.

The Finance Ministry and the Defense Agency discussed the defense
buildup program in mid-May. Reportedly, a Defense Agency official
not responsible for the matter discussed the program as a special
envoy by Administrative Vice Defense Minister Takemasa Moriya.
Rumor is circulating in the Defense Agency that this official has
accepted a reduction of the defense buildup program in talks
behind the scenes with the Finance Ministry.

SCHIEFFER