Identifier
Created
Classification
Origin
06TOKYO2946
2006-05-30 02:00:00
UNCLASSIFIED
Embassy Tokyo
Cable title:  

JAPANESE MORNING PRESS HIGHLIGHTS 05/30/06

Tags:  OIIP KMDR KPAO PGOV PINR ECON ELAB JA 
pdf how-to read a cable
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UNCLAS SECTION 01 OF 12 TOKYO 002946 

SIPDIS

SIPDIS

DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA;
WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST
DIVISION; TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS
OFFICE; SECDEF FOR JCS-J-5/JAPAN,
DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA
FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY
ADVISOR; CINCPAC FLT/PA/ COMNAVFORJAPAN/PA.

E.O. 12958: N/A
TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA

SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 05/30/06

Index:
UNCLAS SECTION 01 OF 12 TOKYO 002946

SIPDIS

SIPDIS

DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA;
WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST
DIVISION; TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS
OFFICE; SECDEF FOR JCS-J-5/JAPAN,
DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA
FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY
ADVISOR; CINCPAC FLT/PA/ COMNAVFORJAPAN/PA.

E.O. 12958: N/A
TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA

SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 05/30/06

Index:

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

4) World Bank Wolfowitz in Tokyo speech calls for new
international conference on Iraq assistance

Security front:
5) SDF to send medical team to assist victims of Java
earthquake
6) Cabinet decision on USFJ realignment today but Okinawa's
requests for revisions ignored
7) Foreign Ministry objects to Futenma relocation site not
being spelled out in JDA's final draft of cabinet decision on
USFJ realignment
8) Security council sets basic policy toward USFJ realignment
9) LDP policy chief Nakagawa: Defense budget will be subject to
cuts, too, s part of overall fiscal reform to avoid massive tax
increase
10) Government set to present bill to current Diet session
raising JDA to ministry status
11) JDA toughening policy of dealing with companies leaking
classified information

Regional issues:
12) China, South Korea suddenly pull out of multilateral coast
guard drill aimed at rooting out terrorists and WMD from high
seas
13) JCG readies new anti-piracy scheme
14) US to ask Japan at summit to support US-India nuclear pact

Political agenda:
15) Minshuto head Ozawa reaching out to former LDP postal rebels
in order to form joint struggle against LDP
16) In speech, LDP presidential hopeful Yasuo Fukuda criticizes
Prime Minister Koizumi for Yasukuni visits
17) Former Prime Minister Yoshiro Mori says next prime minister
should not visit Yasukuni

18) Nikkei company survey of plans for investment in plant and
equipment shows double-digit growth for third year in a row


(Corrected copy) Prime minister's US visit to start on June 27

Articles:

1) TOP HEADLINES

Asahi, Mainichi, Yomiuri:
Illegal exemptions of pension premium payments found in five more
prefectures, totaling over 110,000 cases in 26 prefectures

Nihon Keizai
Social Insurance Agency (SIA) to frontload reforms, reflecting on
illegal premium waivers

Sankei:
Hankyu decides to buy Hanshin shares for 930 yen per share

Tokyo Shimbun:

TOKYO 00002946 002 OF 012


Government, ruling camp to give up submitting SIA reform bill to
current Diet session due to issue of illegal premium waivers

2) EDITORIALS

Asahi:
(1) Correction of fixed number of seats might be Lower House's
suicide
(2) Although attack on Pak remembered as nightmare, democracy
now rooted in South Korea

Mainichi:
(1) Visit to Japan by ROK abductees' kin: Group of Diet members
dealing with abduction issue should be established in ROK
(2) Java quake: We want to extend wide-ranging assistance

Yomiuri:
(1) Takeover bid only option for railway firms
(2) Japan must offer fiscal, personnel, technical help in
aftermath of Java quake

Nihon Keizai:
(1) More tasks left for Hankyu, Hanshin railway firms
(2) Pacific, Islands Summit: Power game unfolded in peaceful sea

Sankei:
(1) Rescue of abductees left as key challenge for Koizumi
successor
(2) Narita Airport: Fully make use of more advantages

Tokyo Shimbun:
(1) Java quake: Japan must help remove uneasiness
(2) South Korean government must cooperate in resolving
abduction issue

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, May 29

NIHON KEIZAI (Page 2) (Full)
May 30, 2006

10:03
Met with JDA Director-General Nukaga at Kantei. Later, met with
Chief Cabinet Secretary Abe, Deputy Chief Cabinet Secretary
Futahashi, and others. Afterwards, met with Deputy Vice Foreign
Minister Nishida.

11:12
Met with Philippine House Speaker Venecia.

12:24
Attended a memorial service at the Chidorigafuchi War Cemetery at
Sanban-cho, Tokyo.

14:13
Met at Kantei with Foreign Minister Aso and MOFA Asian and
Oceanian Affairs Bureau Director-General Sasae. Later, met with
Agriculture Minister Nakagawa and METI Minister Nikai.

15:04
Met with MOFA Consular Affairs Bureau Director-General Tanizaki.

TOKYO 00002946 003 OF 012



17:02
Attended an LDP executive meeting in Diet.

17:40
Attended a meeting of the Gender Equality Council at Kantei.

18:02
Attended a meeting of the Security Council and afterwards met
with Minister of Internal Affairs and Communications/Minister in
Charge of Postal Services Privatization Takenaka.

18:42
Arrived at residence.

4) World Bank governor reiterates need for new international
conference to discuss financial aid for Iraq

NIHON KEIZAI (Page 1) (Full)
May 30, 2006

In an interview with a Nihon Keizai Shimbun reporter in Tokyo
yesterday, visiting World Bank Governor Paul Wolfowitz reiterated
the need for a new international conference to be held to discuss
specific assistance measures, such as the transfer of funds and
technology, for the self-sustainability of the newly established
Iraqi government that is now operating full scale. Regarding
North Korea, the governor said that if Kim Jong Il and other
leaders made a bold policy switch, for instance, an
implementation of economic reform, the World Bank would consider
assistance to that nation.

The governor also said that it would be desirable for the World
Bank to play the role of providing the Iraqi government with
expert advice on measures to prevent corruption and poverty, in
addition to financial aid.

On the proposed new international conference, Wolfowitz said:
"The international community would be able to learn the present
situation in Iraq through such a conference," adding that the
Iraqi side had expressed an expectation for a new conference
during periodic talks held between the World Bank and Iraq from
before the inauguration of the new government in Iraq.

5) Java earthquake: Japan to send SDF troops to quake-hit area
for medical support

YOMIURI (Page 1) (Full)
May 30, 2006

Defense Agency Director-General Nukaga late yesterday instructed
the Self-Defense Forces (SDF) to ready themselves to engage in
international emergency rescue activities in Java Island,
Indonesia, which was earlier hit by an earthquake. A medical unit
from the Ground Self-Defense Force (GSDF) and a transport unit
from the Air Self-Defense Force (SDF) will be sent to the region.
An advance team of 19 officials will depart for the region this
morning.

The medical unit will be composed mainly of personnel from the
10th Chubu Ground Defense Force (based in Nagoya City). Personnel
to be dispatched are expected to reach several hundreds. This

TOKYO 00002946 004 OF 012


dispatch was decided in response to the Indonesian government's
request made yesterday to Japan.

6) Gov't rejects Okinawa's call for changes to USFJ realignment
plan; Cabinet decision today, with first consideration given to
bilateral agreement

ASAHI (Page 1) (Abridged)
May 30, 2006

The government yesterday held a meeting of the Security Council
of Japan (SCJ),in which the government decided to implement a
final agreement reached between Japan and the United States on
the planned realignment of US forces in Japan. The SCJ decision
will be adopted in a cabinet meeting to be held today. In this
decision, the government only says the planned relocation of the
US Marine Corps' Futenma Air Station in Okinawa Prefecture will
be "based on a plan approved in the Japan-US Security
Consultative Committee (two-plus-two ministerial)." The decision
does not specify a bilateral agreement to relocate Futenma
airfield to the cape of Henoko in the island prefecture's
northern coastal city of Nago. In the meantime, Okinawa
Prefecture has asked the government to disapprove the coastal
relocation plan. With a Japan-US summit scheduled ahead, however,
the government has rejected Okinawa's call for changes to the
plan in order to give precedent to the bilateral agreement over
local consent. There are concerns even from within the government
about this course of action.

The government is expected to make a cabinet decision today on
the US force realignment, featuring Japan's cost sharing for the
redeployment of US Marine Corps troops from Okinawa to Guam and
the relocation of Futenma airfield. In the cabinet decision
expected today, the government will also repeal its previous 1999
cabinet decision, which adopted a now-revised "Henoko offshore
plan" and incorporated a package of pump-priming measures for
local communities.

"We cannot accept the Japan-US agreement," said Yoritaka
Hanashiro, chief of the Okinawa governor's office. "This point
should be reflected (in the government's decision)," Hanashiro
added. Okinawa is also opposed to repealing the 1999 cabinet
decision. Hanashiro also said, "We don't know if the government
will continue the economic package for local communities in the
prefecture's northern districts."

In yesterday's cabinet ministerial meeting, Minister of State for
Okinawa Affairs Koike suggested the need to modify the cabinet
decision. "I hope the cabinet decision will clarify economic
packages for Okinawa," Koike said in the ministerial meeting.

Even so, the government rejected Okinawa Prefecture's call for
changes to the plan. For one thing, it has been a month since the
final agreement was reached between the Japanese and US
governments. For another, a Japan-US summit is scheduled for June

29. The government has therefore given first consideration to its
commitment there to implement the final agreement. Meanwhile,
Okinawa Governor Keiichi Inamine will leave Japan on June 4 for
the United States. This also prodded the government to expedite
the decision.

7) Foreign Ministry upset at Defense Agency's mention of nothing

TOKYO 00002946 005 OF 012


in final plan about Futenma relocation site

SANKEI (Page 2) (Abridged)
May 29, 2006

The government will hold a cabinet meeting today to discuss its
policy regarding the final agreement reached between Japan and
the United States on the planned realignment of US forces in
Japan. However, the Foreign Ministry is strongly upset with the
Defense Agency, claiming that the agency's final draft specifies
nothing about where to relocate the US Marine Corps' Futenma Air
Station. "It fails to reflect the Japan-US agreement," a Foreign
Ministry official said. Foreign Minister Taro Aso will call for
the agency to retouch the draft in today's meeting of cabinet
ministers. The Defense Agency has revealed a lack of
interdepartmental coordination.

Today's cabinet ministerial will be held with the participation
of Aso, Chief Cabinet Secretary Shinzo Abe, Defense Agency
Director General Fukushiro Nukaga, Finance Minister Sadakazu
Tanigaki, and Minister of State for Okinawa Affairs Yuriko Koike.

The Defense Agency's initial draft specified a plan to lay down
two runways in a V-shape at a Futenma alternative facility to be
built in a coastal area of Camp Schwab in the city of Nago,
noting that Futenma airfield will be relocated to a coastal area
across the cape of Henoko and contiguous waters in Oura Bay and
Henoko Bay. However, Okinawa Prefecture has been opposed to the V-
shaped plan for that coastal area. The Defense Agency therefore
crossed out all these specific place names in its final draft.
The final draft says the Futenma relocation will be implemented
"on the basis of a plan approved in the Japan-US Security
Consultative Committee (on May 1)."

However, the Foreign Ministry claimed on May 26 that the Defense
Agency's final draft fails to ensure the construction of the V-
shaped airstrips. The Foreign Ministry, in its proposal to the
Defense Agency, took the position that the final draft is
inappropriate for a cabinet decision since it does not set forth
the government's course of action to implement the Japan-US
agreement. Koike also suggested the need to coordinate on the
final draft, saying, "I hear Okinawa Prefecture and Nago City
have yet to consent (to the coastal relocation plan)." In the
meeting, Koike pointed out that the final draft fails to
incorporate Okinawa Prefecture's position. She is expected to
clarify her cautious view when the government makes a cabinet
decision on May 30.

Meanwhile, Okinawa Prefecture has also asked the government to
change the final draft on economic stimulus packages. That is
because the final draft is unclear on whether the government will
continue its package of economic measures based on the 1999
cabinet decision regarding Futenma relocation. Okinawa Governor
Keiichi Inamine will come up to Tokyo today and will likely ask
the government to retouch the final draft.

8) Security Council of Japan approves US force realignment basic
policy; Okinawa to announce disapproval of government policy

YOMIURI (Page 4) (Full)
May 30, 2006


TOKYO 00002946 006 OF 012


The government decided at a Security Council of Japan meeting
yesterday on its basic policy concerning the implementation of US
force realignment plans. The cabinet is scheduled to formally
approve the government's basic policy this morning. Okinawa Gov.
Keiichi Inamine is expected to announce his disapproval of the
policy today, saying, "It does not reflect Okinawa's wishes."

The basic policy will abolish the December 1999 cabinet decision
incorporating economic stimulus measures for the northern part of
Okinawa based on the original Henoko offshore plan for the
relocation of Futenma Air Station. Okinawa is reacting strongly
to the repeal of the 1999 cabinet decision for fear of losing
economic stimulus measures for the northern part. On May 11,
Defense Agency Director General Fukushiro Nukaga and Inamine
signed a basic agreement signifying "continued talks based on the
government's plan." Okinawa is unhappy with the draft cabinet
decision devoid of "continued talks."

9) Defense spending also subject to budget cut: LDP policy chief
Nakagawa

TOKYO SHIMBUN (Page 2) (Full)
May 29, 2006

Liberal Democratic Party (LDP) Policy Research Council Chairman
Hidenao Nakagawa revealed in a speech delivered in Kagoshima City
on May 28 that the LDP would make defense expenditures subject to
budget cuts. He stated: "It's time to conduct a national debate
on the cost for realigning US forces in Japan and a review of the
Midterm Defense Buildup Program (Chukibo)."

He pointed out the need for reducing defense budget, saying, "In
order to avoid large-scale tax hikes, we must have great
resolve." He indicated: If Japan demonstrates to the
international community that it can participate by its action
(rather than just by offering money) for international peace, its
burden will be lessoned."

10) Government, ruling coalition to submit bill to upgrade
Defense Agency to ministry status to current Diet session

SANKEI (Page 5) (Full)
May 27, 2006

The government and ruling parties decided on May 26 to submit a
bill to raise the Defense Agency to ministry status to the
ongoing session of the Diet. The Liberal Democratic Party's (LDP)
Cabinet and Defense divisions formally approved the bill in a
joint meeting the same say. The bill will be submitted to the
Diet, waiting for a conclusion of the internal procedures of the
LDP's junior coalition partner New Komeito. However, the outlook
is that it will be difficult to get the bill through the Diet
during the current session. The bill, therefore, will be a major
issue of an extra Diet session slated for the fall. The bill
stipulates that the Defense Facilities Administration Agency
would be abolished and its operations transferred to the Defense
Agency. It also stipulates that international peace cooperation
activities would be raised to a primary duty for the Self-Defense
Forces.

11) JDA to penalize firms with maximum fine of 80% of contract
money if they leak defense secrets

TOKYO 00002946 007 OF 012



NIHON KEIZAI (Page 1) (Excerpts)
May 28, 2006

The Defense Agency (JDA) decided to obligate firms contracted
with it for production of defense-related equipment, such as
missiles and radar, to pay a penalty if they leak defense
secrets. The JDA will stipulate a penalty provision in a contract

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and thereby urge firms that leak information to pay a maximum
penalty of 80% of the value of the contract. This policy is
expected to apply to more than 100 firms, including Mitsubishi
Electric Corp. and Mitsubishi Heavy Industries. The JDA, which
aims to implement this policy in June, will hurriedly make
coordination with firms on the policy.

This move by the JDA came, primarily sparked by the revelation in
January that data relating to the development stage of surface-to-
air missiles had leaked to an organization affiliated with the
pro-Pyongyang General Association of Korean Residents in Japan
(Chongryon). The United States also has a strong interest in
Japan's management of classified data, as the US is to jointly
develop a missile defense system with Japan.

12) China, ROK cancel just before start their participation in
six-nation joint exercises to pursue suspicious vessels

YOMIURI (Page 2) (Full)
May 30, 2006

Six countries - Japan, China, South Korea, Russia, the United
States, and Canada -planned to carry out joint exercises to
pursue suspicious boats in the East China Sea, the Sea of Japan,
and other waters starting on May 27, but China and South Korea
cancelled their participation just before the start of the
drills, according to information obtained by the Yomiuri Shimbun.
Both China and South Korea cited unexpected administrative
affairs to explain their cancellation, but the speculation is
that both countries did so out of consideration to North Korea.
The joint exercises are going on among four nations without the
participation of China and South Korea.

The Japan Coast Guard (JCG) played a key role in planning the
joint drills. The initial plan was to carry out relay pursuit by
patrol boats from China, South Korea, Japan, and Russia in the
sea areas covering about 2,000 kilometers ranging from Shanghai
in China to Russia's coast facing the Sea of Japan. According to
the JCG, China and South Korea informed the JCG of their
cancellation in the joint exercises on the afternoon of May 26
and early hours of May 27, respectively.

In the initial plan, a suspicious vessel was defined as a ship of
a country under suspicion of transporting weapons of mass
destruction out of its boundaries. But on May 26, the JCG changed
the status of this ship to a ship suspected of committing such
illegal acts as smuggling, including people. Just before the
change of the plan, South Korea again asked Japan about the
purpose of the training and reportedly said: "It'll be difficult
to take part in the training at this point in time."

13) JCG to set up antipiracy office

ASAHI (Page 1) (Abridged)

TOKYO 00002946 008 OF 012


May 29, 2006

The Japan Coast Guard (JCG) will launch a special task force to
cope with pirates in Southeast Asia, covering the Straits of
Malacca, a vital point for international sea traffic. The JCG is
mulling sending an official to an international information-
gathering body to be newly established in Singapore, as Japanese
ships have been attacked there by pirates.

The task force, or the Office of Antipiracy Measures, will be set
up at JCG headquarters in January next year. It will be staffed
with five personnel for information gathering, analysis, and
countermeasures. The office will forward local information to
shipping firms.

The JCG will also send an official to a piracy-related
information center to be established this year in Singapore. The
JCG expects to get information as soon as possible through its
local staff and to issue warnings in cooperation with other
countries.

14) US urges Japan to support US-India nuke deal; Issue to be
take up at Japan-US summit

ASAHI (Page 1) (Excerpts)
May 27, 2006

The government of the United States has called on the Japanese
government to support its decision to back India's nuclear energy
development, several Japanese government officials revealed on
May 26. President George W. Bush will likely bring the issue to
his meeting with Prime Minister Junichiro Koizumi planned for
June 29 in Washington. The Japanese government is now studying
the issue in the direction of supporting the US decision. There
is strong criticism in the Japanese government that the deal
would further undermine the Nuclear Nonproliferation Treaty
(NPT). The dominant view in the government is that "Japan as the
only country to have suffered nuclear attacks should respond
carefully."

India is a nuclear power, but it has not signed the NPT.
Washington has explained that if the International Atomic Energy
Agency (IAEA) inspects India's civilian nuclear facilities, the
nonproliferation structure will be strengthened. However, the US-
India deal does not cover inspections of India's military
facilities, leading to concerns that nuclear weapons would
effectively be placed outside of the international arms control
structure.

Japanese government officials said US officials asked major
countries, including Japan, for support soon after the deal was
concluded with India. Tokyo has not stated its official position,
but the government is now considering issuing a statement of
basic understanding of the agreement for reasons: 1) the deal
enables inspections of India's civilian nuclear facilities,
strengthening the nonproliferation structure; 2) it would boost
India's economic growth; and 3) Britain and France have already
expressed their support.

15) Minshuto head Ozawa may join hands with postal rebels in next
summer's Upper House election


TOKYO 00002946 009 OF 012


TOKYO SHIMBUN (Page 2) (Full)
May 29, 2006

Asked about the possibility of his party joining hands with
independents lawmakers, who left the Liberal Democratic Party
(LDP) when they refused to vote for Prime Minister Junichiro
Koizumi's postal-privatization bills, Ichiro Ozawa, president of
the main opposition party Minshuto (Democratic Party of Japan),
responded at a press conference in Tokushima Prefecture on May
28:

"It will be best if our party can join hands in the election with
those who think the present LDP is not good. I hope we can
cooperate for one purpose - driving the coalition of the LDP and
New Komeito into a minority (in the House of Councillors)."

Regarding specific cooperation with postal rebels who were
defeated in last Septembers' House of Representatives election,
he indicated that his party would back them as independent non-
LDP candidates, saying, "It will be best that they will run on
our party's ticket. But they are not necessarily required to be
official Minshuto candidates if they don't want to do so."

16) Fukuda criticizes Koizumi on Yasukuni" "Emotional response is
the worst"; Consumption tax hike also suggested

MAINICHI (Page 1) (Full)
May 28, 2006

Former Chief Cabinet Secretary Yasuo Fukuda of the Liberal
Democratic Party delivered a speech at a New Komeito Upper House
meeting in Nagoya yesterday. In it, touching on Japan's strained
relations with China and South Korea due to Prime Minister
Junichiro Koizumi's visits to Yasukuni Shrine, Fukuda said:

"The situation is truly unfortunate. If one states, 'What's wrong
with paying homage at Yasukuni Shrine?' the other side only
becomes emotional. It's not good for top leaders and the general
public to react emotionally."

Fukuda's critical comment was apparently directed at the prime
minister's attitude about his shrine visits. Fukuda also
indicated that the consumption tax rate must be raised by about
5%.

Although he stopped short of announcing his candidacy for the LDP
presidency, Fukuda noted regarding a tax hike: "Your cooperation
is essential. I will come here again to ask for your cooperation
when the time comes."

He also criticized hard-line views on China in the LDP, stressing
the need to improve relations between Japan and China:

"This important bilateral relationship will be very difficult to
maintain unless someone deals with them in a cool headed manner.
Discussions in Japan have escalated too far. Voices raised here
reach China and South Korea, creating a vicious cycle. A quarrel
starts when bad words are used with no consideration to each
other's position. There is no need to pick a fight."

Fukuda also stated this about a possible consumption tax hike:
"The topic is unpleasant to raise, but a 5% hike would generate

TOKYO 00002946 010 OF 012


12 trillion yen or so."

17) Mori: Koizumi's successor must not visit Yasukuni Shrine

ASAHI (Page 3) (Full)
May 29, 2006

Former Prime Minister Yoshiro Mori, appearing on a TV-Asahi
program yesterday, clearly stated that whoever becomes Prime
Minister Koizumi's successor, that person must not visit Yasukuni
Shrine, saying: "If he thinks it's important to mend relations
(between Japan and China),he must not pay homage at the shine."
He also urged Yasukuni Shrine to take steps voluntarily in
response to some LDP members' call for the separate enshrinement
of Class-A war criminals, saying:

"If national interests are being damaged severely by the
collective enshrinement of Class-A war criminals at Yasukuni, the
shrine must make an appropriate decision. Although the prime
minister has repeatedly described the Yasukuni issue as a matter
of the heart, it has escalated into a political issue. The matter
does not work positively for Japan's national interests. It must
be considered from a broad perspective."

Mori also took a negative view about the idea of building a
national war memorial, put forward by a panel when Yasuo Fukuda
was serving as chief cabinet secretary, saying: "I don't think
such is possible. Japanese people have special sentiments for
Yasukuni Shrine."

18) Poll: Private sector to boost capital investment by double
digits for third consecutive year

NIHON KEIZAI (Top Play) (Excerpts)
May 29, 2006

The private sector is expected to boost capital outlays in fiscal
2006, according to a survey on capital investment conducted by
the Nihon Keizai Shimbun. In their initial plans, companies in
all industries (consolidated basis, total figures of capital
spending inside and outside of Japan) will increase capital
investment by more than 14.5% on average over fiscal 2005,
marking a double-digit surge for the third consecutive year for
the first time since the bubble period. Given the strong
performance of the digital area, manufacturing industries, led by
electrical machinery and materials, will boost investment by
17.0% , while non-manufacturing industries will also log a 10.3%
increase, the first double-digit surge in 15 years. If the
current trends of a strong yen and falling stock prices persist,
companies might lose momentum, but investment is likely to
continue to serve as a locomotive for the nation's economy for a
while.

According to the plans of 1,498 companies that responded to the
survey by May 16, the growth rates of all industries will expand
for the third consecutive year. The yearly rate of increase in
fiscal 2006 will also be the second highest, following the 15.4%
recorded in fiscal 1989.

(Corrected copy) Prime minister's US visit to start on June 27

SANKEI (Page 3) (Full)

TOKYO 00002946 011 OF 012


May 26, 2006

US aims to underscore difference in treatment to Japan, China

Prime Minister Junichiro Koizumi will visit Canada and the US
from June 27 through July 1, according to an official
announcement by Chief Cabinet Secretary Shinzo Abe in a press
conference yesterday. In his last tour of the US before leaving
office in September, the prime minister wants to highlight the
Japan-US alliance in a global context.

President George W. Bush and Koizumi are expected to exchange
views in their meeting on June 29 on reconstruction assistance
for Iraq, where the security situation is still looking grim
despite the inauguration of a full-scale government. The two
leaders are also likely to discuss North Korea's nuclear and
abduction issues.

Prior to the US visit, the prime minister will also visit Canada
to meet Prime Minister Stephen Harper - the first since Harper
took office - in Ottawa on June 28.

Ahead of the G-8 summit (Sankt Peterburg Summit) in Russia in mid-
July, the prime minister will coordinate views with the US and
Canadian leaders on various issues facing the international
community.

US likely to treat Koizumi as state guest

Takashi Arimoto, Washington

Prime Minister Junichiro Koizumi is not the chief of state, so
the upcoming US tour is an "official visit," as said by
Presidential spokesperson Snow. But the US is likely to treat
Koizumi as a de facto state guest by arranging a banquet for him.
When Chinese President Hu Jintao visited the US in April, the US
held only a luncheon. According to a US government source,
Washington's red-carpet treatment, unlike the one to the Chinese
leader, "is also intended to demonstrate the close alliance
between Japan and the US."

Snow said: "The Japan-US alliance is based on common values and
agenda items," adding that the two leaders are expected to
discuss antiterrorism, the protection of freedom and democracy,
the promotion of security and prosperity in Asia, and other
issues.

President Bush has rarely held a banquet since assuming the
presidency, but he did hold one for Australian Prime Minister
John Howard on May 16. Australia has also dispatched troops to
Iraq, like Japan.

Bush has highly appreciated Japan and Australia for the
cooperation they have extended in fighting terrorism in
Afghanistan and Iraq since the terrorist attacks on the US in
September 2001.

Washington's treatment of Prime Minister Koizumi also reflects
the President's desire to "offer highest-level hospitality"
before he leaves office in September, in order to convey his
personal appreciation for his cooperation for Iraq
reconstruction.

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