JAPANESE MORNING PRESS HIGHLIGHTS 06/07/06

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E.O. 12958: N/A TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 06/07/06 Index: 1) Top headlines 2) Editorials 3) Prime Minister's daily schedule 4) Chief Cabinet Secretary ABE meets with envoys, including Ambassador Schieffer, to make pitch for international solution to North Korea abduction issue Iran connection: 5) Iran warns Japan to start Azadegan oil field project by September of loss development right 6) Iran tells Japan it is considering the US' comprehensive proposal on the nuclear issue China ties: 7) Government unfreezing yen loans to China to accelerate improvement in relations 8) Government awarding China yen loans in order to keep issue out of the LDP presidential race 9) Another US newspaper calls on next Japanese prime minister to comply with China's demand and avoid Yasukuni visits 10) Muneo Suzuki continues to pursue the Foreign Ministry in the Diet, this time on the spy-related Shanghai consulate suicide case Defense issues: 11) CNFJ website reveals berth that will be used by nuclear- powered carrier 12) Cabinet to approve on June 9 bill raising JDA to ministry status Politics: 13) Former Prime Minister Hashimoto undergoes surgery in lower intestine; recovery in several months 14) Minshuto (Democratic Party of Japan) experiences surge in registered "party supporters" thanks to the Ozawa factor Economic agenda: 15) Government trying to reduce the long-term fiscal revenue shortfall to 15-17 trillion yen 16) NTT will be completely broken apart over 10 years: government panel 17) New government financial institution that replaces a number of obsolete ones will be a stock company completely funded by the government 18) "Regions are on the brink of collapse," Prime Minister is told by senior officials Articles: 1) TOP HEADLINES Asahi: Murakami sold NBS shares at peak over period of two days soon after Livedoor bought NBS shares Mainichi: Murakami urged Rakuten to buy NBS shares Yomiuri: TOKYO 00003119 002 OF 012 Murakami masterminded buyout of NBS hares Nihon Keizai: New government-affiliated financial institutions to be reorganized into stock corporations in Oct. 2008 Sankei: Elevator manufacturer to be raided Tokyo Shimbun: Ministry of Land, Infrastructure, and Transport starts investigations on elevators nationwide 2) EDITORIALS Asahi: (1) 30,000 suicides: The government must come up with measures (2) World Cup: Exciting month ahead Mainichi: (1) End of freeze on yen loans to China: Both Japan, China should benefit in the end (2) Alleged slaying of Iraqis by US soldiers: Strict investigations needed to build relationship of trust Yomiuri: (1) Plans to reform NHK cannot put money first (2) Can Japan help develop Central Asia? Nihon Keizai: (1) Consolidate farmland to improve productivity (2) Reorganization of stock market through competition Sankei: (1) Agricultural reform: Don't fear taboos (2) Elevator deaths: Prevent future accidents Tokyo Shimbun: (1) Central Asia: Can Japan make up for late start? (2) Energy White Paper: Resource strategy indispensable 3) Prime Minister's Official Residence (Kantei) Prime Minister's schedule, June 6 NIHON KEIZAI (Page 2) (Full) June 7, 2006 08:37 Attended cabinet meeting. Administrative Minister Chuma stayed on. Met Chief Cabinet Secretary Abe. 09:07 Returned to Kantei. 10:03 Met Wakayama Prefecture Plum Queen Tanimoto and others, followed by Economy, Trade, and Industry Minister Nikai and others. 11:30 Met Defense Agency Director General Nukaga and Vice Defense Minister Moriya. TOKYO 00003119 003 OF 012 14:06 Attended a tourism promotion convention held at the Akasaka Prince Hotel by the National Hotel Unions Federation. 15:15 Met at Kantei with critic Naoki Tanaka, followed by Intellectual Property Rights Headquarters member Hiroyuki Abe, Kadokawa Holdings Tsuguhiko Kadokawa, and others. 16:47 Attended a party to celebrate the publication of a book on reform by mayors, at the City Center Hotel. 17:30 Met at Kantei with Economic and Fiscal Policy Minister Yosano, Assistance Deputy Chief Cabinet Secretary Saka, followed by Internal and Communications Minister Takenaka. 19:02 Met at his official residence with Abe, Deputy Chief Cabinet Secretaries Nagase and Suzuki, and parliamentary secretaries of SIPDIS various ministries. 4) Chief Cabinet Secretary asks for cooperation from foreign ambassadors for resolution to abduction issue: "International support is essential" SANKEI (Page 2) (Full) June 7, 2006 The government yesterday invited US Ambassador to Japan Schieffer and other foreign envoys from 18 countries and the European Union (EU) to the Prime Minister's Official Residence (Kantei) to ask for their cooperation to resolve the abduction issue caused by North Korea. This meeting was aimed at putting more pressure on North Korea. The envoys took a position of basically supporting Japan on the abduction issue. Ahead of the Group of Eight (G8) Summit in St. Petersburg, Russia, slated for mid-July, the government intends to strive to gain more international support so that the abduction issue will be on the major agenda at the G8 Summit. Envoys of the G8, including the United States, Britain, Germany, France, and Russia, and representatives of the diplomatic missions of such countries as China, South Korea, Thailand, and Sweden were invited to the meeting. China and South Korea sent ministers on behalf of their ambassadors to the meeting. During the meeting, Chief Cabinet Secretary SHINZO ABE asked for international cooperation: "Abductions are acts that are impermissible in terms of human rights as well as humanity. Strong support from other countries of the world is essential to resolve such issues." Deputy Chief Cabinet Secretary Seiji Suzuki explained the measures the Japanese government has taken, such as stepping up pressure on North Korea by strictly applying existing laws in dealing with that country. Participants in the meeting expressed their willingness to back up Japan like: "This is an issue that transcends political principles and positions. We share your rage"; "It is a painful, tragic incident for families of abductees"; and "The TOKYO 00003119 004 OF 012 international community should work together to grapple with the issue." 5) Iranian oil minister warns Japan that it will cancel INPEX's exploration rights YOMIURI (Page 2) (Full) June 7, 2006 Takehito Kudo, Teheran Iranian Petroleum Minister Kazem Vaziri-Hamaneh said regarding the development of the Azadegan oilfield, regarding which Japan's INPEX Corp. has exploration rights: "We cannot tolerate Japan's delay." He thus warned that Iran would cancel INPEX's exploration rights if the corporation did not start development work by September, according to the Iranian national television broadcaster on June 6. The oil minister's statement seems to reflect Iran's intention to place pressure on Japan not to fall in step with the United States and European countries, who have been searching for ways to apply sanctions on Iran on the nuclear issue by using a "coalition of the willing." 6) Iranian foreign minister promises to give serious thought to package of proposals YOMIURI (Page 4) (Full) June 7, 2006 Foreign Minister Taro Aso held a telephone conversation with Iranian Foreign Minister Manuchehr Motaki last night in which Aso again urged Iran to halt nuclear development as well as to accept a package of proposals for resolving the nuclear issue, produced by Germany and the United Nations Security Council. In response, Motaki said: "We will consider the proposals seriously." 7) Japan to resume yen loans to China to improve relations; Decision splits cabinet ministers YOMIURI (Page 2) (Full) June 7, 2006 The Council for Overseas Economic Cooperation, chaired by Prime Minister Junichiro Koizumi, has decided to lift a freeze on the disbursement of about 74 billion yen in yen loans to China for fiscal 2005. The decision is apparently intended to improve relations with China, which have been strained due to Koizumi's visits to Yasukuni Shrine and other issues. "The Japan-China foreign ministerial in May has set the tone for improving bilateral relations," Foreign Minister Taro Aso noted. The government intends to accelerate the trend. Before reporters last night, Koizumi underlined the significance of the government's decision to resume yen loans to China. At the same time, he only explained that the decision was made after considering the matter comprehensively. Chief Cabinet Secretary Shinzo Abe's explanation was also vague: "The decision was made after discussing the importance of Japan-China relations, China's sentiment toward Japan, and other factors." TOKYO 00003119 005 OF 012 Toranosuke Katayama, secretary general of the LDP caucus in the House of Councillors, criticized the government's lack of a clear explanation, saying, "A thorough explanation is necessary to lift a freeze on financial aid. It's not good to generate an indecisive impression." Views were split even along cabinet ministers. Economy, Trade, and Industry Minister Toshihiro Nikai, known as being pro-China, commented, "I hope (the resumption of yen loans to China) will bring good results both to Japan and China." Agriculture, Forestry, and Fisheries Minister Shoichi Nakagawa raised an objection, saying, "I don't understand why Japan has to aid China." 8) Government decides to end freeze on yen loans to China in a bid to prevent it from becoming a campaign issue in LDP presidential race ASAHI (Page 4) (Excerpts) June 7, 2006 Daisuke Yamamoto The government yesterday decided to end the freeze on yen loans to China for fiscal 2005, which will be implemented in fiscal ¶2006. Behind this decision lies the government's intent to demonstrate a positive stance on relations with China and also its political motive to prevent the yen loans from becoming a campaign issue in the Liberal Democratic Party (LDP) presidential election. China, however, is opposed to the idea of yen loans turning into a political issue. The lifting of the freeze on yen loans to China is unlikely to serve as a diplomatic tool to improve relations with China. The Japanese and Chinese governments have agreed to end the yen loan program in 2008. The government planned to get approval of this agreement at a cabinet meeting at the end of March but deferred doing so due to critical views within the LDP. Given that a Japan-China foreign ministerial was held in a good atmosphere in May, the Foreign Ministry confirmed its judgment that ''it is the right time to (lift the freeze on yen loans),as both nations are now in a lull," according to a senior diplomat. When the August 15 anniversary of the end of the war draws near, the question of whether Prime Minister Koizumi will visit Yasukuni Shrine will draw wide attention; Japan-China relations will inevitably become tense. A high-level government official also revealed consideration to China yesterday, noting: "There's no need to end the yen loans to China at this point. Instead of rocking the boat, it's wiser to signal a get-along message." Also, if Japan delayed deciding on lifting the freeze on yen loans to China, this could become an issue in the LDP presidential race. The next administration would be forced to make a decision. Such a situation should be avoided. There seems to have been such a political judgment. In fact, a Foreign Ministry official pointed out: "The longer the decision is delayed, the more complicated the issue will be in terms of internal politics as well as on the diplomatic front." 9) China will continue to blame Japan: US column TOKYO 00003119 006 OF 012 SANKEI (Page 6) (Full) June 6, 2006 Yoshihisa Komori WASHINGTON-China will never stop blaming Japan even if Japan's prime minister in the future pledges not to visit Yasukuni Shrine in compliance with the Chinese government's demand, a US-based Chinese journalist said in a US newspaper column. The New York Sun carried Kin-Ming Liu's article in its column dated May 16: "Look Who's Talking." Referring to recent Japan-China relations, the article quotes the Chinese government as saying Prime Minister Koizumi's repeated visits have "hurt the feelings of the Chinese people and damaged the political foundation of China-Japan relations, which is why the relations have deteriorated." This Chinese assertion is false, Liu writes in the article. This article argues that China is critical of Japan's foreign policy in general and that China's real aim is to keep Japan in a weak position. "Imagine," Liu continues in the column, "that Japan's next prime minister announces that he will honestly face history and do the following things to mend fences with China: 1) he will never visit Yasukuni Shrine; 2) he will apologize for Japan's World War II atrocities every time the subject arises; and 3) Japan will ban all history textbooks that irritate China." The article goes on: "Would the Chinese then forgive and embrace the Japanese once and for all if Japan were to perform this ultimate kowtow? No." Even if Japan's next prime minister refrains completely from visiting Yasukuni Shrine and fulfills any other demands from China, the article says, "China will maintain that Japan hasn't repented enough." Liu further writes: "China will keep opposing Japan's permanent membership on the United Nations Security Council. Chinese submarines will still enter Japan's waters, secretly if necessary. And, of course, anti-Japanese riots will SIPDIS always be stirred up." Liu recounts in the column: "The problem lies not with what Japan does or doesn't do but what China is. China takes full advantage of Japan's war guilt to extract concessions from Japan on whichever current issue is on the negotiating table." With this, the column says Beijing's attack on Yasukuni visits is one of its strategies toward Japan. Liu, who wrote this column, was a Hong Kong daily's copy chief and was a Washington-based columnist. The writer is now a US- based journalist on Asia. 10) Aso, Suzuki exchange verbal jabs on issue of suicide of diplomat in Shanghai YOMIURI (Page 4) (Abridged) June 7, 2006 At a meeting yesterday of the House of Representative Committee on Audit and Oversight of Administration, Lower House member Muneo Suzuki of the New Party Daichi clashed with Foreign Minister Taro Aso over the issue of the suicide of a diplomat at the Consulate General in Shanghai, the Foreign Ministry's TOKYO 00003119 007 OF 012 measures for improprieties involving ministry officials, and other matters. It was the second time for Suzuki to pursue the Foreign Ministry since last November. Suzuki asked how the Foreign Ministry responded to the Shanghai suicide case, saying, "When the official killed himself on May 6, 2004, what did the Foreign Ministry do? I want to know all the facts." In response, Aso said: "The direct cause was intimidation by Chinese security authorities, a threat, or an act similar to that. The ministry has repeatedly filed stern protests with China since the occurrence of the incident. Although it was not immediately reported to the Prime Minister's Official Residence, the ministry judged back then that it would cause any problem. I think that was the decision made by officials concerned." Given the fact that the person who committed suicide was in charge of communication, Aso also indicated the ministry had taken necessary measures to prevent the leakage of secrets, saying, "Upon confirming that any secrets had not been leaked, the ministry has changed coded." Suzuki also criticized the ministry's punishments as too lenient by pointing out such incidents as a fatal traffic accident by drunken driving, sexual molestation, and sneaking camera shots of women. Aso rebutted, "The ministry punished them properly." But Suzuki protested, "Anyone committing such a crime outside the bureaucracy would be fired. Decisions must be made based on social rules." 11) Yokosuka base berth for nuclear carrier use: US Navy website MAINICHI (Page 27) (Full) June 7, 2006 The US Navy has now announced a plan to deploy a nuclear-powered aircraft carrier in 2008 to Yokosuka base in the city of Yokosuka, Kanagawa Prefecture. At the base, Berth 12 was expanded with construction work starting in 2003. The US Navy had explained on its website that the berth's expansion was intended to moor a nuclear-powered aircraft carrier. The Defense Facilities Administration Agency's Yokohama bureau, which ordered the expansion work, has recounted that the berth was renovated because it became too old to use. The DFAA bureau has also explained that the expansion work has nothing to do with the planned deployment of a nuclear-powered aircraft carrier. The DFAA is thinking of filing a protest with the US Navy. The Yokosuka city government, which has yet to decide on whether to accept the nuclear carrier deployment plan, is also upset. The US Navy will correct the website information. The explanation in question was given in a May 25 article of "Navy News" released by US Naval Forces Japan on its website. "Berth 12 has been expanded for the USS George Washington, which will be deployed to Yokosuka in 2008," the English-language news blog said. Berth 12 was extended from its overall length of 277 meters to TOKYO 00003119 008 OF 012 410 meters, and the expansion work was completed in late March this year. In yesterday's ceremony at the berth, DFAA Yokohama Bureau Director General Takamizawa gave a speech, in which he said the expansion work was for the USS Kitty Hawk, a US flattop currently deployed to Yokosuka. "We will inquire of the US Navy about the article," a DFAA Yokohama bureau official commented. The official added, "We need to consider filing a protest." Meanwhile, Yokosuka City has asked the United States to deploy a conventional flattop. "They probably thought to deploy a nuclear carrier because they've agreed with the Japanese government," said Base Relations Division Director Akimoto at the Yokosuka city government office. Akimoto also said, "They don't understand our standpoint." A US Navy official at USNFJ headquarters told the Mainichi Shimbun that the berth expansion work had nothing to do with the USS George Washington's planned deployment to the base. The official also said the article would be corrected. 12) Cabinet to adopt on June 9 bill upgrading the Defense Agency to a ministry SANKEI (Page 5) (Full) June 7, 2006 The Liberal Democratic Party (LDP) endorsed yesterday a bill to upgrade the Defense Agency to a ministry. After approval of the New Komeito, the LDP's coalition partner, the government is expected to adopt the bill at a cabinet meeting today. With Prime Minister Junichiro Koizumi seeking no extension of the current session ending June 18, the bill will probably be carried over to the next session for deliberations. The bill would change the Defense Agency, now affiliated with the Cabinet Office, into an independent ministry. It also calls for making international cooperation, including UN peacekeeping operations and activities based on the terrorist and Iraq special measures laws, a main duty of the Self-Defense Forces. Following this, international cooperation and responses to contingencies surrounding Japan would be stated in the advisory items to the National Security Committee. 13) Former Prime Minister Hashimoto underwent operation to remove parts of intestines; Recovery to take several months YOMIURI (Page 4) (Full) June 7, 2006 Former Prime Minister Ryutaro Hashimoto, 68, underwent emergency surgery at a Tokyo hospital on June 5 to remove a large part of his large intestine and part of his small intestine and to attach an artificial anus, his son revealed, Lower House member Gaku Hashimoto of the Liberal Democratic Party, in a press conference yesterday in Tokyo. The former prime minister remains in intensive care and is conscious. But it could be several months before Hashimoto can resume his daily routine. 14) Minshuto's rank-and-file members, supporters greatly increase to 240,000 due to "Ozawa effect" TOKYO 00003119 009 OF 012 TOKYO SHIMBUN (Page 2) (Full) June 7, 2006 The number of supporters and rank-and-file members of Minshuto (Democratic Party of Japan) reached about 244,000 at the end of May, as reported yesterday to a standing secretaries general meeting of the main opposition party. Although the figures were less than the party's target of a membership of 250,000, the supporters and rank-and-file members substantially increased by about 100,000 compared to the previous year. Minshuto had its largest membership of about 310,000 in 2002, as tallied prior to its presidential election in September that year. The supporter system is Minshuto's unique arrangement introduced in 2002. A supporter has to pay an annual registration fee of 2,000 yen, while each rank-and-file member is required to pay 6,000 yen annually for the party membership fee. Both supporters and members are given the right to vote. The party's action plan for fiscal 2006 set a target of securing 250,000 supporters and rank-and-file members. To attain the goal, the party obliged each of its lawmakers to enroll 1,000 supporters or rank-and-file members of at least 500. The party imposed a penalty on those who failed to collect 500 names, and awarded those who secured more than 1,000. Minshuto suspended its recruitment due to the falsified email issue. In the wake of Ichiro Ozawa's assumption of the party's presidency in April, Minshuto won the Lower House by-election for the Chiba No. 7 constituency and it then accelerated the drive to recruit new members. The "Ozawa effect" led to the great increase this time of supporters and rank-and-file members. The showcase of the supporter system is that both supporters and members can vote in the presidential election, but no presidential election has been conducted since September 2002. This is because all the past four presidents stepped down before serving out the presidential term; and so, the party had to carry out a vote of only its Diet members. The possibility is that Ozawa will be elected without going through a vote. The supporters, therefore, again may be unable to use their right to vote in September's election. 15) Government, ruling parties plans to shift primary balance into black in FY2011 by reducing revenue shortage to 15 to 17 trillion yen NIHON KEIZAI (Page 1) (Excerpts) June 7, 2006 The government and the ruling coalition yesterday started looking into setting the total amount of shortages in revenues to fund policy-related expenditures, without depending on loans, for fiscal 2011 at 15 to 17 trillion yen. This is a hot issue in discussions on a simultaneous reform plan for revenues and spending. The Cabinet Office had estimated the amount at approximately 20 trillion yen, but the amount will be revised downward, given estimated tax revenues put on an upward trend owing to the recent economic recovery and also because it now seems to be possible to cut spending on some certain policy- related items. The government plans to turn the primary balance into the black TOKYO 00003119 010 OF 012 in fiscal 2011. The primary balance is an indicator to show whether policy spending will be covered with tax and other revenues through the reform of revenues and expenditures. The government intends to make up for the expected revenue shortfall by spending cuts and tax increases. Assume that the amount of revenue shortages would be set at 17 trillion yen. In this case, if a 10-trillion-yen cut in expenditures is realized, the shortage will be covered by tax increases worth only 7 trillion yen. Should a thorough cut in expenditure be carried out, a hike in the consumption tax rate will be modest. The government will announce tax revenues for the last fiscal year by the end of this month. The amount is expected to be up 2 trillion yen over the estimate. In addition, the growth of spending in such areas as social security is likely to be held down more than expected. In the government and ruling parties, the view is gaining influence that it would be possible to reduce the revenue shortage for fiscal 2011 by more than 3 trillion yen. If the government comes up with a more bullish outlook on economic growth, the amount of estimated revenue shortage might be further reduced to upper 10 trillion yen. 16) Telecommunications panel advises NTT to completely split group in 10 years, NHK to reduce the number of channels to five MAINICHI (Page 7) (Excerpts) June 7, 2006 The council on telecommunications and broadcasting, an advisory panel to Internal Affairs and Communications Minister Heizo Takenaka and chaired by Toyo University Professor Satoshi Matsubara, compiled a final report on NHK and NTT reforms. On the sticky issue of NTT's organization, the report recommended that the current holding-company system should be scrapped in 2010 to completely separate the equity links in the group company. For NHK, the report included measures to lower the subscription fees, separate the sports and entertainment sections from its main business, and reduce the number of channels to five. Takenaka would like to carry out coordination with the Liberal Democratic Party first and then reflect the panel's recommendations in the government's basic policy on economic and fiscal management for 2006 due out in July. The LDP, however, has opposed a reduction in NHK's subscription fees, as well as an early review of its organization. Given this, stormy negotiations are expected, and it is still uncertain to what extent the panel's recommendations will be adopted in the government's policy. 17) Public lenders to be turned into stock firms in Oct. 2008 NIHON KEIZAI (Top Play) (Excerpts) June 7, 2006 The government's plan to reform public financial institutions was unveiled yesterday. Such institutions as the Japan Finance Corporation for Small Business (JFCSB) and the National Life Finance Corporation (NLFC) will be integrated into a stock firm - fully financed by the government - in October 2008. The new firm will apply a corporate accounting system in accordance with the TOKYO 00003119 011 OF 012 Corporate Law. An expert committee will monitor whether the company is doing business effectively. The reform plan will provide the basis for a financial reform bill to be submitted to the Diet by the start of next year's regular Diet session. The government, however, intends to have the new firm continue offering loans to bluechip firms, so uncertainty is still looming over whether the new company would squeeze the private sector. Under the Administrative Reform Promotion Law, enacted in the current Diet session, the eight government-affiliated financial institutions will be reorganized or privatized. It has also been decided in general that some businesses of JFCSB, NLFC, and other institutions will be integrated into a new government-affiliated institution and that the Development Bank of Japan and the Shoko Chukin Bank will be privatized. But since the law presents no specific measures, the government is working out details. Main points in reform plan for public lenders Reorganize or privatize government-affiliated institutions in October 2008. Submit reform-related bills to the next regular Diet session. (New government-affiliated firm) Establish a 100% state-owned stock company. Separate the accounts of domestic and international businesses. Clarify profitability. Have an expert panel monitor whether the new firm is doing business effectively and whether the firm is exerting pressure on e on the private sector. (Shoko Chukin Bank and Development Bank of Japan) Completely privatize the institutions. Apply the Banking Law. Have an expert panel examine the privatization process. (Response to crisis) Set up a designated financial institution system designed to enable short-term funds to be offered quickly. 18) Parliamentary secretaries complain to prime minister: "Local economies are on verge of collapse" ASAHI (Page 4) (Full) June 7, 2006 "Local economies are on the verge of collapse." "Because of the Koizumi reforms, we might have lost votes." These remarks came from parliamentary secretaries last night when they dined with Prime Minister Koizumi at the Prime Minister's Official Residence. The Koizumi administration's reform line is again drawing criticism, following the Murakami Fund scandal. Koizumi promptly rebutted them: "I don't agree." According to a participant, Parliamentary Secretary for Environment Wataru Takeshita (Liberal Democratic Party) and and Parliamentary Secretary for Land, Infrastructure, and Transport Masatoshi Ishida complained to the prime minister. Ishida told Koizumi: "In the previous elections, our party saw a drop in TOKYO 00003119 012 OF 012 votes in three municipalities. Isn't this the results of the Koizumi reforms?" Takeshita criticized the widening regional disparities: "Local economies are experiencing hardship and are on the verge of collapse. Japan cannot grow unless it keeps a balance between urban and rural areas." Koizumi elaborated: "Even when we think things are no good, there is always hope." He appeared not to be attentive to the candid advice of others. SCHIEFFER