DAILY SUMMARY OF JAPANESE PRESS 06/05/06

UNCLAS SECTION 01 OF 11 TOKYO 003072

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: DAILY SUMMARY OF JAPANESE PRESS 06/05/06

INDEX:

(1) Diverse views in US on Yasukuni Shrine; US gov't officials,
experts concerned about impact on Asia diplomacy

(2) 2006 LDP presidential race: Launch of a group of 94 junior
and mid-level lawmakers supporting Shinzo Abe

(3) Clear differences in referendum bills of ruling camp and
Minshuto; Enactment of legislation difficult even when
deliberations start

(4) Tanigaki to attend G-8 Finance Ministers Meeting scheduled to
start on June 9 to discuss measures against skyrocketing oil
prices and other matters

(5) Interview with Jerry Paul, NNSA principle deputy
administrator: GNEP as stepping stone for international framework

(6) The challenges of a resources-poor country - energy security
(Part 2): Saudi Arabia hopes to enhance friendship with Japan,
leveraged by petrochemical joint venture

(7) Many local governments eye independent measures to control
suburban openings of medium-sized stores even less than 10,000
square meters in floor space

ARTICLES:

(1) Diverse views in US on Yasukuni Shrine; US gov't officials,
experts concerned about impact on Asia diplomacy

ASAHI (Page 3) (Full)
June 4, 2006

WASHINGTON-How is the United States looking at Prime Minister
Koizumi's visits to Yasukuni Shrine? With his US visit scheduled
for later this month, there are various arguments cropping up
from among US government officials and experts on Japan-US
relations. They differ on his practice of paying homage at the
shrine. Some are calling for him to stop his pilgrimage to the
shrine. However, there are also deep-seated arguments standing
behind him. President Bush and his administration remain silent
about Koizumi's shrine visits out of consideration for Japan as
an ally of the United States. However, the Bush administration is
concerned about a potential impact on its Asia diplomacy.

Japan's prime minister should promise to stop visits to Yasukuni
Shrine, a senior US lawmaker said in a latter to US House of
Representatives Speaker Hastert.

US House of Representatives International Relations Committee
Chairman Hyde, 82, sent the letter to the speaker in late April.
In that letter, the congressman conditionally welcomed Koizumi if
he would address the US Congress when he visits the United
States. This, however, had repercussions. In the United States,
there were two responses.

One has been a view representing those who regard Hyde's opinion
as peculiar to his generation. Hyde is a veteran who fought Japan
in the Pacific theater of World War II. One Japan expert noted
that Hyde's assertion came from his war experience and was not
common to the American public.

TOKYO 00003072 002 OF 011



The other response represents those who think the problem it is
not so simple, according to a source in the US Congress. For now,
the source noted, the Yasukuni issue is a matter of little
interest in the United States. However, there is still a chance
of Japan's past sparking controversy between Japan and the United
States should it be mishandled. One senior official at the
Department of State stated that once the American people deepen
their understanding of the Yasukuni issue, they would be
displeased.

In his mid-May speech, Michael Green, National Security Council
(NSC) senior director for Asian affairs at the White House until
late last year, explained public opinion in the United States by
classifying four groups from right to left.

The "far right" group, clearly anti-Chinese, supports Koizumi's
Yasukuni homage. "The more Japan irritates China, the more
pleased this group is," Green says. The so-called
neoconservatives are in this group.

The "right-of-center" group is represented by the Bush
administration, which weighs the Japan-US alliance and thinks it
better not to intervene in the issue. Moderates in the Republican
Party belong to this group.

The "left-of-center" group includes the right wing of the
Democratic Party. This group is pro-Japanese and has expectations
for Japan's role, so it insists that the United States should
intervene in the issue to call for the prime minister to stop
visiting the shrine.

The "far left" group includes the Democratic Party's left wing
and the New York Times, which has noted in an editorial that the
United States and Asia would be isolated if the Yasukuni issue is
left unattended.

Based on Green's analysis, different standpoints in the United
States over the Yasukuni issue and China can be illustrated
below.

Hyde is a Republican conservative. However, his war experience
makes him take a stance of intervening in the issue. Former
Deputy Assistant Secretary of Defense Campbell urges the Bush
administration to intervene in the issue, asserting that
Koizumi's Yasukuni homage is not in Japan's interests.

Meanwhile, former Deputy Secretary of State Armitage, a
Republican moderate, takes the position that Japan's prime
minister should continue to visit Yasukuni Shrine as long as
China complains about it.

However, few think it all right to leave the issue to fester.
That is because they think the deterioration of Japan-China
relations can never be of benefit to the United States. "If Japan
loses its moral superiority in Asia, the United States' position
would also weaken," says Paul Giarra, a former senior director
for Japan at the Department of Defense.

"If China keeps quiet," Armitage also says, "there will be room
for the prime minister make a decision."

Bush administration remains silent but paying close attention

TOKYO 00003072 003 OF 011



What made the US administration remain silent about Koizumi's
Yasukuni visits was the Japan-US summit that was held in Kyoto in
November last year.

Bush asked Koizumi about his view of Japan-China relations.
Koizumi spouted his opinion about his Yasukuni visits. Bush then
thought to himself that Koizumi would not take his word,
according to a US government source.

If the United States tells Japan's prime minister to stop
visiting Yasukuni Shrine, that would mean tuning in to China. The
Bush administration does not want the United States and China to
face off with Japan. Japan's public opinion is now split over the
Yasukuni issue, so the United States' intervention in this issue
could incur anti-US sensitivity in Japan.

"We understand this is an important issue, so we're paying
attention to this issue," a high-ranking official of the US
government said. "But," this official added, "the United States
is not in a position to do something about it." The Japan-US
summit is slated for late June. However, Bush is not expected to
touch on the Yasukuni issue there.

(2) 2006 LDP presidential race: Launch of a group of 94 junior
and mid-level lawmakers supporting Shinzo Abe

ASAHI (Page 4) (Abridged slightly)
June 3, 2006

Lawmakers from the Liberal Democratic Party (LDP) held an
inaugural meeting on June 2 of a parliamentary group supporting
Chief Cabinet Secretary Shinzo Abe's policy of helping those who
fail gain a second chance. A total of 94 Diet members joined
yesterday's session at party headquarters. Many in the LDP see
the meeting as the establishment of "an Abe faction" by young and
mid-level members, who are expected to back Abe in the LDP
presidential election in September. Being aware that former Chief
Cabinet Secretary Yasuo Fukuda is moving up quite fast behind him
in recent opinion polls, Abe aims to win in factional competition
with Fukuda. His sudden action has confused LDP members and
bureaucrats.

"I greet you on behalf of the government," said Abe in a speech
at the meeting. Stressing his position as a representative of the
government, Abe stated in a low-key way: "The government would
appreciate it if you conduct active discussion on policy matters
and support this policy direction." When asked about the meeting
in a press conference later in the say, he said, "It's not a
political move."

Many people do not take Abe's explanation at face value. The
parliamentary group is a carefully worked out "organization" for
the presidential race by Abe and his aides. Yoshihide Suga,
senior vice minister for internal affairs and communications, who
is a leader of the group and a members of the Niwa-Koga faction,
began to take action soon after the Golden Week holidays in early
May when attention was fixed on Fukuda's visit to Washington.

They had a scenario of inviting Abe as lecturer to the group on
May 30 when he released an interim report of the government's
"Council on Promotion of a Second Challenge," which Abe chairs.
Under the scenario, they collected the names 20 members, the

TOKYO 00003072 004 OF 011


number required for running in the presidential race, in just two
weeks. Abe as a cabinet member is unable to move freely outside
the government, but he can take official action as chief cabinet
secretary in a parliamentary group that promotes government

SIPDIS
policy.

The 94 members are from various factions of the LDP. The group
has succeeded in making a certain impact on the party. After the
meeting, Suga proudly told reporters his support for Abe, "Now is
not time to make a decision on matters by a tally of numbers."

House of Councillors member Ichita Yamamoto said: "Many members
from various factions have their hopes on Chief Cabinet Secretary
Abe." Koizumi also told reporters later in the day, "The
membership of 94 is larger than I expected."

In an attempt to gain public support, Abe will increase the
number of his appearances on TV programs starting June 3. After
the end of the ongoing Diet session, he intends to hold dialogues
with the public across the country to let them know of his
"second challenge" policy, leading to the formal announcement
after the July G-8 summit of his candidacy for the LDP leadership
race.

However, many LDP members think that it is too early to take
action since three more months are left until September's
presidential race. There remains the issue whether the Mori
faction will field a single candidate. A lawmaker with close ties
to Abe explained his move: "He has no other choice but to take
action before (Mr. Fukuda starts his campaign) to overcome those
veteran lawmakers who favor Mr. Fukuda."

New Diet members to take loyal test

Abe is determined to continue the Koizumi reform drive and to
narrow the income gap in society, which is regarded as "negative
legacy" of the reforms. In consideration of a consistency with
the Koizumi reform program, he has emphasized improvement in the
safety net, as well as an equal opportunity for offering second
chances.

The other aim is to build a personal network with senior
bureaucrats by drafting support measures that affect all
agencies. Although Abe is well versed in health, labor and
welfare affairs, he has served only in the chief cabinet
secretary post. Some lawmakers point out his lack of experience

SIPDIS
in serving in cabinet posts.

The bureaucracy is reluctant to support Abe. Many senior
officials were disturbed by the chief cabinet secretary's idea of
drafting policies with bureau directors going over the heads of
cabinet ministers and vice ministers. Abe therefore was unable to
include concrete measures in the set of his campaign pledges.

Abe is looking forward to proposals by the parliamentary group in
order to flesh out his campaign pledges, but the lawmakers who
attended the meeting are interested only in politics. House of
Representatives member Yuzo Yamamoto, who heads the group,
stressed, "We did not get together for preparing for the LDP
presidential race." When asked by reporters about whether he
supported Abe, Lower House member Jun Matsumoto, a Kono faction
member, who has close ties with Foreign Minister Taro Aso,
replied, "This is a pure study group to discuss imminent

TOKYO 00003072 005 OF 011


important issues." But his is a minority view.

The group is composed of junior and mid-level Lower House
members, who are now serving in their seventh-term or less and
Upper House members serving in their second-term or less, with a
generational change in mind.

The number of Lower House members serving in their first and
second-term alone totals 50. A new lawmaker said: "If I did not
join the group, they would think that I dislike Mr. Abe. This is
just a loyalty test."

At a press conference on June 2, Minshuto (Democratic Party of
Japan) Secretary General Yukio Hatoyama commented: "It seems that
the Abe faction has been established." However, it is uncertain
how far the group will expand.

(3) Clear differences in referendum bills of ruling camp and
Minshuto; Enactment of legislation difficult even when
deliberations start

ASAHI (Page 4) (Abridged slightly)
June 2, 2006

The ruling coalition of the Liberal Democratic Party (LDP) and
its junior partner, New Komeito, and the largest opposition
party, Minshuto (Democratic Party of Japan) have submitted two
separate national referendum bills that would set procedures for
amending the Constitution. The Diet launched yesterday
deliberations on the bills in the House of Representatives
plenary session, in which explanations of the purpose of the
bills followed by a question-and-answer session were conducted.
This was the first time for the Diet to deliberate constitutional
reform legislation since the present Constitution was put into
effect. Yesterday's session highlighted clear gaps in views on
procedures for holding a national referendum and the hurdles to
amending the Constitution that lie between the ruling camp and
Minshuto. Diverging views will likely remain a main issue when
the two camps negotiate changes in the draft legislation.

The ruling camp-sponsored bill stipulates that a referendum would
be conducted only for constitutional reform. LDP lawmaker Okiharu
Yasuoka, chief director of the Lower House Special Committee on
the Constitution, stated:

"Under the direct democratic system, there are three referendums
beside a constitutional one: a review of Supreme Court judges,
and a referendum for the Local Autonomy Law."

The Minshuto-sponsored bill, meanwhile, widens the objectives of
referendum to significant issues in the national political agen.
Minshuto Constitutional Commission Chairman Yukio Edano stressed:
" It is not violation of the Constitution that the Diet conducts
on its own will national referendum and carefully exercises its
authority.

Under the ruling camp's bill, the minimum age for granting voting
rights should be 20, which is the same as the voting age. The
Minshuto-proposed bill, however, calls for lowering the minimum
age to 18 in principle. The legislation also stated that the
minimum age should be lowered to 16 if the Diet approves. Edano
asserted: "It is necessary to give young generations as many
opportunities to take part in voting as possible."

TOKYO 00003072 006 OF 011



The two bills show clear differences in "campaigns" questioning
whether to approve or disapprove national referendum.

The ruling bloc's bill bans those who involve in voting affairs
and certain public servants, including prosecutors and police
officers, from carrying out the campaigns until the voting day.
It also prohibits educators from taking advantage of their
statuses for their campaigns. Minshuto's legislation allows
anyone but those involved in election matters to campaign.
Yasuhiro Sonoda of Minshuto stated: "If banned, we are concerned
that professors would not reveal their views on constitutional
reform in their lectures."

The ruling coalition's bill prescribes vote-buying conducts as a
crime. Tetsuo Saito of the New Komeito said, "Penalties would be
applied only to heinous activities beyond the permissible scope
of the common sense." Minshuto's bill does not set a bribery
penalty. Katsumasa Suzuki stated:

"It is desirable for workfellows to talk about the Constitution
at Japanese pubs. If the boss pays for the drinks, there is the
possibility that the boss would be punished. It is difficult to
differentiate a campaign from an exchange of views."

Regarding how to fill in the ballot, the ruling camp's
legislation states that an O would mean approval, an X would
means disapproval; and a blank vote cast would still be valid. A
majority would be decided base on the total valid votes. Yasuoka
explained the reason for that: "Public opinion would be judged
based on the result of a referendum."

Minshuto's bill stipulates that an O would be regarded as
approval and the others would be regarded as disapproval. A
majority would be decided based on the total cast votes. This
means that the largest opposition party's bill would make
constitutional reform more difficult than that of the ruling
coalition.

Akira Kawai of the Japanese Communist Party and Kiyomi Tsujimoto
of the Social Democratic Party argued: "The two bills would lead
to amending Article 9." They urged the bills be scrapped.

The government and the ruling camp are carrying out coordination
knowing that the current Diet session will not likely be
extended. Therefore, the two bills will likely be carried over to
an extraordinary session in the fall. Changes in them will also
likely be negotiated in the next session.

(4) Tanigaki to attend G-8 Finance Ministers Meeting scheduled to
start on June 9 to discuss measures against skyrocketing oil
prices and other matters

SANKEI (Page 3) (Abridged slightly)
June 5, 2006

Meetings of the financial ministers of the Group of Eight
industrial nations are scheduled to take place on June 9-10 in
St. Petersburg, Russia. The meetings are likely to focus on
energy security, such as ways to stabilize crude oil prices and
the stable supply of energy to developing countries on the back
of the Iranian nuclear issue.


TOKYO 00003072 007 OF 011


In the run-up to the G-8 Summit, Russia, a major oil producer
comparable to Saudi Arabia, will chair the G-8 finance ministers
meeting to come up with measures against surging oil prices, a
destabilizing factor for the global economy.

Speculative moves divorced from supply and demand have been
pointed out in the oil futures market, where prices have shot
past 70 dollars a barrel. In order to come up with measures, the
G-8 financial ministers are expected to ask oil producers for
highly accurate data on oil reserves and development plans.

They will also discuss technical assistance in wind and solar
power generation to reduce oil and natural gas consumption. Japan
will actively announce its views as an advanced energy-saving
country.

The G-8 will also consider using such international organs as the
International Monetary Fund and the World Bank to extend
financial aid to developing countries in serious need of stable
supply of oil under escalating oil prices.

Interview with Finance Minister Sadakazu Tanigaki

Shogo Otsuka of the Sankei Shimbun: What is the role of Russia,
which is going to chair the G-8 Summit for the first time?

Finance Minister Tanigaki: Russia is a major oil and natural gas
producer. For the global economy, it is extremely important for
Russia to fulfill its responsibilities in the world, including
Asia and the Far East. Japan is eager to cooperate with Russia to
make the upcoming Summit a success.

Otsuka: What can Japan do to help increase the efficient use of
energy as an advanced energy-saving country?

Tanigaki: Having successfully overcome oil crises, Japan's energy
efficiency is the highest in the world. Japan has much to offer
to other countries. I will actively promote Japan's technology,
know how, and human resources.

Otsuka: What must be done to deal with speculative moves in the
oil market divorced from supply and demand?

Tanigaki: To improve the situation, we must confirm the need to
create a system to circulate appropriate information so as not to
allow skewed information to cripple moves in the market.

Otsuka: Can we expect plausible efforts?

Tanigaki: High growth in countries like China and India is
pushing up demand for energy. At the same time, oil supply
involves difficult geopolitical factors. It will require
tremendous efforts, and it is not realistic to expect a cure-all.
We must build a system for investment in every process from the
exploration to development to production to refinement of oil,
while pursuing energy saving.

(5) Interview with Jerry Paul, NNSA principle deputy
administrator: GNEP as stepping stone for international framework

Tohoku Shimbun (Full)
May 22, 2006


TOKYO 00003072 008 OF 011


The US Bush administration came up with an advanced energy
initiative this February called "Global Nuclear Energy
Partnership (GNEP)." Under this initiative, the US and other
countries will develop technologies to recycle spent nuclear fuel
that cannot be used to develop nuclear weapons and provide fuel
services to developing countries. Tohoku Shimbun interviews Jerry
Paul, principle deputy administrator of the National Nuclear
Security Administration, on the Partnership concept.

What is the aim of GNEP?

"The initiative is designed to expand the peaceful use of nuclear
power while reducing the threat of nuclear proliferation. Global
electricity demand over the next 30 to 50 years is expected to
grow two to three times above the current level. In order to meet
the growing demand without destroying the environment, there will
be no other means but nuclear power."

-- International Atomic Energy Agency (IAEA) Director General
ElBaradei has also advocated a multinational management concept
for spent nuclear fuel.

"We have advocated establishing a framework in which each country
will voluntarily participate. GNEP is a concept worked out from a
long-term perspective, and I believe that the concept will be
turned into an international framework through repeated debates.
I do not know how effectively this mechanism will work to solve
Iran's and North Korean nuclear development problems, but we have
already obtained support from Britain, France, Russia, and other
countries. IAEA is expected to play a key role in enhancing
energy security."

-- The Japanese and US governments have agreed to conduct joint
research, such as the joint designing of recycling facilities.

"The US has kept nuclear-fuel recycling on the backburner for
more than 30 years. Japan has produced advanced research results
in this area. We expect Japan to develop technologies related to
the development of new nuclear fuel and fast reactors, as well as
nuclear safeguards. In the area of safe management, too, Japan's
atomic power industry is at a high level, and we are paying
attention to it."

-- Some observers see such cooperation as a violation of the
Japan-US Atomic Energy Cooperation Agreement, which bans the
transfer of important nuclear recycling-related technologies.

"As a result of a detailed study of whether there would be legal
problems, we have concluded that the current agreement is
satisfactory for the two countries to promote envisioned
cooperative research and development. We believe there will be no
need to revise the accord."

(6) The challenges of a resources-poor country - energy security
(Part 2): Saudi Arabia hopes to enhance friendship with Japan,
leveraged by petrochemical joint venture

SANKEI (Page 1) (Full)
June 2, 2006

Saudi Arabia's Prince Sultan visited Japan this past April. A
dinner party for the prince was held at the Prime Minister's
Official Residence. The participants in the party included

TOKYO 00003072 009 OF 011


incumbent cabinet members, such as Foreign Minister Taro Aso and
Minister of Economy, Trade and Industry (METI) Toshihiro Nikai,
and two former prime ministers, Ryutaro Hashimoto and Yoshiro
Mori. Saudi Arabia is the largest oil-producing country in the
world and is the largest oil supplier for Japan. In fact, Japan
imports some 30% of oil from that country.

Prime Minister Junichiro Koizumi was elated when he addressed the
party: "Two former prime ministers and four incumbent cabinet
members have unusually joined this dinner party tonight." The
party went on in a friendly atmosphere. Prince Sultan, as if to
respond to this hospitality, offered a plan to establish a fund
as a token of friendship. He then said, "I'd like to donate
500,000 dollars for exchanges between the two countries," adding,
"This is my idea as well as King Abdallah's."

Japan is closely linked to Saudi Arabia in terms of oil. But
after Japan lost its rights to extract oil from that country's
Khafji oil field in February 2000, "the relationship between the
two countries grew somewhat cold to each other," an oil industry
source said. The dinner party, however, was a sign that bilateral
relations were returning again to a honeymoon period.

The Khafji oil field was the first such project developed under
the Rising Sun flag. Khafji became Japan's largest oil supplier,
compared to other oil fields developed by Japan. The amount of
oil it supplied to Japan since 1961 totaled 2.8 billion barrels.
The concessions over Khafji were in the hands of Arabian Oil
Company (AOC). Then AOC President Keiichi Konaga, formerly
Administrative Vice Minister of International Trade and Industry
(MITI which was the predecessor of the current Ministry of the
Economy, Trade and Industry),engaged in negotiations with Saudi
Arabia on an extension of Japan's rights in the Khafji oil field.

Konaga now serves as advisor to AOC Holdings. Looking back on
those days, he confessed: "I felt like I was bucking a strong
wind when I pushed ahead with negotiations." When full-fledged
negotiations to extend Japan's interests in the Khafji oil field
started, crude-oil prices were flagging at around 10 dollars per
barrel. Because oil was then in oversupply, many market observers
had a bullish outlook that oil imports would always be easily
available by cash transactions.

Final negotiations held in Saudi Arabia were joined by then MITI
Minister Takashi Fukaya, but both sides failed to agree to terms
because Saudi Arabia, then aiming at departing from its oil-
dependency, called on Japan to invest a huge amount of money in
that country, for instance, 200 billion dollars or more for the
construction of a railway. Konaga now said: "If our company and
the government had worked in much closer cooperation to promote
negotiations, there could have been a more significant impact of
negotiations on Saudi Arabia."

Saudi Arabia wanted to lure Japanese investment in addition to
the sale of its oil to Japan, but Japan placed the securing of
oil before investment. This gap led to Japan's losing its rights
in the Khafji oil field and afterwards made it reluctant to
invest in that country. Close relations between the two countries
began deteriorating accordingly.

What has again brought the two countries closer was a joint
venture between Japan's Sumitomo Chemical and Saudi Arabia's
state-run Saudi Aramco. This project is intended for refining oil

TOKYO 00003072 010 OF 011


and producing petrochemical products at the existing oil refinery
at Rabigh, an area on the coast facing the Red Sea. The project,
if completed, will become one of the largest integrated refining
and petrochemical plant. A total investment is likely to come to
one trillion yen.

Sweeping aside other petrochemical manufacturers from other
countries, Sumitomo Chemical was chosen by Aramco as a business
partner. For Sumitomo Chemical, a major matter of concern was
country risk. The company, after getting a risk analysis from an
overseas research firm, decided to go ahead with the project.
Sumitomo Chemical Executive Officer Takatoshi Suzuki, who takes
care of the project, expressed hope openly: "Availability of
materials at low prices, among other things, is very attractive
indeed."

The groundbreaking ceremony was held in the project site in
March, bringing together top leaders of major Japanese firms
concerned, such as Sumitomo Chemical President Hiromasa Yonekura,
Itochu Corporation President Eizo Kobayashi, Marubeni Corporation
President Nobuo Katsumata, and Mitsubishi Heavy Industries
President Kazuo Tsukuda. President Yonekura emphasized the
significance of the joint venture in a speech given at the
ceremony, noting that it would "contribute to sustainable
economic growth in Saudi Arabia. "This project that helps Japan
to deepen its ties with Saudi Arabia will be of great
significance for the part of Japan, as well," he added.

In terms of energy strategy, it is essential for a resourceless
country, Japan, to keep a good relationship with the largest oil
supplier Saudi Arabia. But King Abdallah, who assumed the throne
late last year, chose China and India for his first official
overseas tour this January. This choice came, perhaps out of his
desire to build relations with rising countries that are likely
to become large oil consumers.

Whether the project this time will succeed is likely to determine
whether Japan and Saudi Arabia can build a friendly relationship
in concrete terms by overcoming past discord over the Khafji oil
field.

(7) Many local governments eye independent measures to control
suburban openings of medium-sized stores even less than 10,000
square meters in floor space

NIHON KEIZAI (Page 1) (Excerpts)
Evening, June 3, 2006

A growing number of local governments are preparing to restrict
store openings in ways stricter than provisions found in the
three amended downtown district revitalization laws aimed at
large stores that took effect in late May. A Nihon Keizai Shimbun
survey found that 10 prefectures and three ordinance-designated
major cities were considering tightening regulations. The three
laws restrict the openings of large stores over 10,000 square
meters in total floor space in suburban areas. But some local
governments are trying to control the openings of even mid-sized
stores.

The Hyogo prefectural government is preparing a set of guidelines
by August that would allow operators to open stores over 6,000
square meters in total floor space only in areas close to major
railway stations in 14 cities in the southern part of the

TOKYO 00003072 011 OF 011


prefecture, such as Amagasaki and Himeji. The prefectural
government intends to impose controls on industrial sites,
thinking that even mid-sized stores at suburban locations facing
main roads could seriously affect shopping streets in the center
of town.

The Fukushima prefectural government plans to implement an
ordinance in October making it mandatory to submit plans in
advance to open stores over 6,000 square meters in floor space.

Fukuoka intends to come up with ways by next March to restrict
areas allowed to open large stores and to urge municipalities to
produce city plans to control the openings of stores between
3,000 and 10,000 square meters in floor space as well.

The existence of suburban commercial areas facing main roads and
light industrial zones exempted from the three district
revitalization laws is a source of concern for local governments.
The move for local governments to come up with independent
regulations is likely to spread across Japan.

SCHIEFFER