JAPANESE MORNING PRESS HIGHLIGHTS 06/12/06

UNCLAS SECTION 01 OF 11 TOKYO 003219

SIPDIS

SIPDIS

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SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 06/12/06


Index:

1) Top headlines
2) Editorials
Prime Minister's weekend schedule: None

US-Japan relations:
3) Three tough issues for Prime Minister Koizumi going into the
end of June summit with President Bush: Iran, USFJ realignment,
and Burma
4) Koizumi to announce at summit meeting with President Bush
Japan's support for US' cooperative nuclear agreement with India
5) Treasury Secretary Snow in meeting with Finance Minister
Tanigaki presses Japan to consider financial sanctions on Iran
for continuing nuclear program
6) Tanigaki, Snow meet for the last time as finance ministers

Aso diplomacy:
7) Foreign Minister Aso in meeting with Iran's vice foreign
minister urges Iran to accept proposed package of rewards for
ending nuclear program
8) Japan, Russia to hold first strategic dialogue at foreign
minister level at G8 summit
9) Foreign Minister Aso: Cautious decision made to extend yen
loans to China beyond fiscal 2006
10) Foreign Ministry is toughening counter-intelligence
measures, including personnel training, following Shanghai
suicide incident

11) Japan, South Korea start EEZ negotiations today but
Takeshima issue likely to be a stumbling block

12) RENK official says US sanctions on Pyongyang working: Glut
of counterfeit bills that North Korea cannot circulate overseas

13) As anti-terrorist measure, METI this year to expand ban on
export of military-use materials, including precious metals

Minshuto President Ozawa in action:
14) Ozawa will definitely run for reelection this fall as
president of Minshuto (Democratic Party of Japan)
15) Ozawa supports raising JDA to ministry status, complains
about bill being submitted at end of current Diet session

Opinion polls:
16) Political opinion poll: 54% of party supporters admit to
voting for another party in past election
17) Yomiuri poll shows an alarming 80% of public see weakening
of "human relations" in Japan

Articles:

1) TOP HEADLINES

Asahi:
Colleges struggling to accept retired baby boomers

Mainichi:
Active fault zone detected near Shimane atomic power plant

Yomiuri:
2004 tsunami ODA aid bids were 'murky'

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Nihon Keizai:
Poll on 400 companies: 90% say child-care packages help companies
keep top workers

Sankei:
Flu outbreak

Tokyo Shimbun:
Retirement payments for public servants to expand 130%

2) EDITORIALS

Asahi:
(1) Second chance for failures: A more moderate market society
should be built

Mainichi:
(1) Intellectual property plan: Create a system where people can
benefit by their wisdom
(2) "Heart-to-heart communication also needs rules (by Yuri
Aono, editorial committee member)

Yomiuri:
(1) Don't slacken efforts to fiscally reconstruct state finances
(2) Local governments should make efforts to slash expenditures

Nihon Keizai:
(1) Intellectual property strategy now at stage of moving from
defense to offense
(2) Hope for G-8 cooperation to stabilize oil prices

Sankei:
(1) Reform of Basic Education Law: Minshuto's (Democratic Party
of Japan) response intangible
(2) Energy strategy: National security viewpoints needed

Tokyo Shimbun:
(1) Terrorism in Iraq: Illusion about mastermind's death
(2) Baby boomers will narrow distance between the food we eat
and agriculture

3) After Prime Minister Koizumi steps down, what will become of
three outstanding Japan-US issues: Iran, force realignment, and
Burma?

NIHON KEIZAI (Page 2) (Abridged)
June 12, 2006

With the end to Prime Minister Junichiro Koizumi's term in office
approaching, Japan and the United States remain saddled with
three tough issues to resolve. The US has urged Japan to impose
financial sanctions on Iran. Washington has also repeatedly urged
Tokyo to implement the bilateral agreement on US force
realignment plans. Japan and the US are also wide apart on Burma
(Myanmar),with Washington even prepared to call for UN
sanctions.

Iran

"Can't you do something about Iran financially?" In his talks
with Finance Minister Sadakazu Tanigaki on the sidelines of the

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G8 financial summit in St. Petersburg on June 9, US Treasury
Secretary John Snow took up the Iranian nuclear issue.

SIPDIS

At present, the Iran nuclear issue hinges on Teheran's response
to a package of incentives presented by the five permanent UN
Security Council members plus Germany.

Should Iran refuse the package, the US intends to push the issue
toward talks at the Security Council. However, with China and
Russia remaining reluctant to impose sanctions, a UN resolution
is unlikely. In anticipation of such a consequence, the US is
searching for ways to impose sanctions by a "coalition of the
willing."

The position of Tokyo, which has strong economic ties to Teheran,
is that Iran is not an imminent threat to Japan and that
sanctions require a UN resolution. If this situation persists,
the policies of Japan and the US would clash. "The Iranian issue
could test the Japan-US alliance," an American specialist noted.

US force realignment

US Defense Secretary Donald Rumsfeld held talks with his Japanese
counterpart Fukushiro Nukaga on June 4 in Singapore in which the
former repeatedly asked, "Are you going to set up a separate
budget slot, or can you finance the project with your defense
spending, which is 1% of GDP?" Given Tokyo's decision to give up
on presenting US force realignment-related bills to the ongoing
Diet session, Rumsfeld was trying to win Japan's assurance of
bearing the cost of relocating Okinawa-based US Marines to Guam.

In a speech, Nukaga referred to US force realignment as the most
significant event for the history of the Japan-US alliance of
several decades. But that, too, is based on the implementation of
the bilateral US force realignment agreement.

A Futenma Air Station relocation plan that followed a zigzag path
created strong discontent among US officials. Washington is
closely watching Tokyo's efforts to come up with the necessary
funds, enact related bills, and convince affected communities.
Washington is likely to press Tokyo harder for the implementation
of the agreement, as necessary.

Burma

The US is considering a UN resolution regarding the situation of
Aung San Suu Kyi, the pro-democracy leader who continues to be
under extended house arrest by decision of the Burmese junta.
Japan intends to oppose such a step, thinking that forcible
action would make her situation even worse.

The US sought to constrain Japan by informally inquiring about
Tokyo's true intention. The US Congress also raised an objection
to Japan's stance. The US is increasingly dissatisfied with
Japan, for it regards the abduction issue involving North Korea
and Burma's case are similar violations of human rights.

4) Japan to express its support for US-India nuclear cooperation
agreement during upcoming Japan-US summit

NIHON KEIZAI (Page 1) (Slightly abridged)
June 11, 2006

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Prime Minister Junichiro Koizumi has decided to express his
support for the US-India agreement on cooperation on civilian
nuclear power. The US, which is brandishing the threat of
sanctions against Iran, a party to the Nuclear Non-Proliferation
Treaty (NPT),for its nuclear development, has decided to
cooperate with India, a nuclear power that is not an NPT member.
The government of Japan, the only country on which nuclear
weapons have been used, has strongly called for nonproliferation.
Chances are that if it makes clear its support for the US and
India out of consideration for the US, it could come under fire
from within and from outside.

Prime Minister Koizumi during his upcoming talks with US
President Bush in Washington intends to convey support for
cooperation between the US and India instead of indicating common
understanding. He made this decision taking into account the fact
that India has indicated that it will accept inspections of its
civilian nuclear facilities by the International Atomic Energy
Agency (IAEA). Tokyo's decision is also motivated by the desire
to strengthen ties with India with the rise of China in mind.

However, in response to the deep-rooted international opposition
to the US having approved India's vague position, Japan intends
to continue to call on India to accept inspections of its nuclear
facilities, including military facilities.

Washington had sought understanding from Japan for its agreement
with India in March, as well as to place the issue on the agenda
of the upcoming bilateral summit. Tokyo has thus far held off
clarifying its stance toward the US-India agreement, with Foreign
Minister Taro Aso noting, "We would like to carefully consider
the possible impact of the agreement on international nuclear
disarmament and the nuclear nonproliferation regime."

5) US Treasury Secretary calls for Japan's cooperation on
financial sanctions against Iran

TOKYO SHIMBUN (Page 3) (Full)
June 10, 2006

Hitoshi, St. Petersburg

Finance Minister Sadakazu Tanigaki and US Secretary of the
Treasury Snow held a bilateral meeting on the sidelines of the G-
8 financial ministers meeting in St. Petersburg, Russia, on June

9.

In reference to Iran's nuclear program, Snow called on Japan to
discuss the possibility of imposing financial sanctions on Iran,
such as a imposing a freeze on funds, saying: "Is it possible for
Japan to express its concerns in the financial area?"

This was the first time for a senior US government official to
ask a key Japanese cabinet minister line up with the US on
sanctions against Iran. Japan is now likely to be under even more
intense pressure to respond.

Tanigaki replied that Japan would determine its response upon
holding discussions with European and other countries concerned.
Japan has been cautious about joining sanctions against Iran,
given its deep economic relations with that country through such

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economic activities as the development of the Azadegan oil field.

On his country's nuclear problem, President Ahmadi-Nejad has
indicated a willingness to look into the package of rewards
proposed by the US, Europe, China, Russia and other countries.
The US has indicated that if the Iranian president rejected this
proposal, Washington would slap economic sanctions against
Teheran.

In the bilateral talks, Tanigaki also stressed the importance of
stabilizing the international exchange market, saying: "Violent
fluctuations on the market are undesirable."

6) Last meeting between Finance Minister Tanigaki and US Treasury
Secretary Snow

SIPDIS

SANKEI (Page 7) (Full)
June 10, 2006

Shogo Otsuka, St. Petersburg

June 9 was the last time for Finance Minister Sadakazu Tanigaki
and Secretary of the Treasury John Snow to meet since Snow
announced in late May his resignation.

After Snow steps down from his post, Tanigaki will be the second
most senior financial minister in the Group of Eight
industrialized nations, following British Chancellor of the
Exchequer Gordon Brown, who is widely expected to succeed Prime
Minister Tony Blair. With the Liberal Democratic Party (LDP)
presidential election coming up in September, there will be a few
chances for Tanigaki to attend other international conferences.

The meeting yesterday was the 12th for Tanigaki and Snow. Before
departing for St. Petersburg, Tanigaki told a Sankei Shimbun
reporter, "Mr. Snow is a gentleman. We get along well."

The first meeting between Tanigaki, who assumed his post in 2003,
and Snow was held in February 2004 when Japan was continuing its
largest ever exchange intervention. Since then, the economic
situations of both countries have improved, and they dined
privately as "good friends" whenever they visited each other's
country.

7) Foreign Minister Aso in meeting with Iranian vice foreign
minister calls for Iran's acceptance of compromise proposal

TOKYO SHIMBUN (Page 3) (Full)
June 10, 2006

Foreign Minister Taro Aso met with the Iranian vice foreign
minister at the Foreign Ministry yesterday to urge Iran's
acceptance of the package of incentives proposed (by six
countries): "We would like your country to fully study the
proposal and then sit down at the negotiating table."

The vice minister replied:

"Although there are positive elements in the proposal, it also
contains dubious, vague parts. We will thoroughly look into it
and present our reply at a proper time. .... Iran would like to
avoid the precondition (of suspending its uranium enrichment

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activities). I believe, though, that there is some leeway between
Iran's position and the rewards proposal."

8) Japan, Russia to hold first strategic dialogue on sidelines of
G8 foreign ministerial

NIHON KEIZAI (Page 2) (Excerpts)
June 11, 2006

The Japanese and Russian governments have decided to hold their
first strategic dialogue on the sidelines of the Group of Eight
(G8) foreign ministerial in Moscow on June 29, ahead of the G8
Summit in St. Petersburg. Foreign Minister Taro Aso will meet
with Russian Security Council Secretary Ivanov (former Foreign
Minister) and again praise the way Russia is tacking with Iran's
nuclear issue. Japan intends to reiterate the need to discuss the
North Korean abduction issue as a major subject at the G8 Summit.

In the strategic dialogue, Japan and Russia are expected to
confirm the need to urge North Korea to return quickly to the six-
party talks. Based on the results of the recent foreign
ministerial meeting between Japan and Central Asian nations held
in Tokyo on June 5 and the Summit Conference of the Shanghai
Cooperation Organization (SCO) between Russia, China, and four
Central Asian nations slated for June 15, the two countries will
also discuss steps against terrorism and narcotics to bring
stability to Central Asia.

As the SCO Summit Conference will be joined also by Iranian
President Ahmadinejad as an observer, Japan and Russia in their
strategic dialogue will also discuss the outlook for Iran's
response on the nuclear issue.

The establishment of a strategic dialogue was agreed on during
the Japan-Russia summit talks held in last November.

9) "Cautious judgment needed for continuing yen loans to China
after fiscal 2006 as well," says Aso

YOMIURI (Page 2) (Full)
June 12, 2006

Commenting on the government decision on June 6 to lift the
suspension of yen loans to China for fiscal 2005, Foreign
Minister Aso during a town meeting held in Kitakyushu on June 11
noted: "(The government has agreed to suspend yen loans to China
until fiscal 2008). Whether the lifting of the suspension should
be continued into that year will be determined depending on the
development of future talks between Tokyo and Beijing." During a
press conference held later, he gave high marks to Chinese
President Hu Jintao's indication of his wish to visit Japan, if
conditions are met.

10) Foreign Ministry to give favorable consideration to diplomats
who report leaks

ASAHI (Page 3) (Full)
June 12, 2006

The Foreign Ministry has decided to strengthen counterespionage
measures for diplomats stationed overseas. The decision stems
from its reflection on the suicide of an official at the Japanese

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Consulate General in Shanghai. In this case, the official killed
himself, leaving a suicide note reading that he was blackmailed
by Chinese authorities to hand over classified information. The
ministry will inform all members of the basic policy that if a
ministry official is threatened to provide clasified information,
the organization will deal with the case. If the official files
an accurate report without concealing anything, the ministry will
give that official favorable consideration in terms of personnel
decisions, even if that person leaked information. The ministry
plans to provide training to inform all its personnel of the
counterespionage measures, as well as to strengthen information
control at missions overseas.

11) Japan-ROK EEZ talks today likely to run into difficulties
over Takeshima issue

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

Japan and South Korea will hold the 5th round of senior working-
level boundary demarcation talks on both countries' exclusive
economic zones (EEZs),starting today at Japan's Foreign Ministry
starting today and running for two days. The talks will be the
first in six years since June 2000. The negotiations, though, are
likely to run into snags, given the issue of Takeshima/Dokdo
islets claimed by both Japan and South Korea.

On the border demarcation issue, Japan intends to propose that
the EEZs should be determined by an equidistant line between
Takeshima and Ullundo as before, with Japan's base point starting
from Takeshima and South Korea's from Ullungdo. South Korea's
previous assertion was to set the border by an equidistant line
between Ullungdo and Okinoshima Island, with South Korea's base
point starting from Ullundo and Japan's from Okinoshima Island.
But South Korea is likely to revise its previous assertion to
make its base point Takeshima.

In the talks today, Japan intends to discuss demarcation after
reaffirming the 1996 agreement reached by the top leaders of both
countries. Given the recently heightened tensions over a marine
survey around Takeshima, Japan intends to propose establishing a
prior notification system on scientific surveys in this area. The
participants include Japan's Foreign Ministry International Law
Bureau Director General Ichiro Komatsu and South Korean Foreign
Ministry Treaties Bureau Director General Park Hui Kwon.

12) NGO survey: North Korea saturated with counterfeit bills
because can't circulate them overseas due to US sanctions

SANKEI (Page 2) (Excerpts)
June 12, 2006

An interview survey conducted in North Korea by a Japanese
nongovernmental organization, Rescue The North Korean
People/Urgent Action Network (RENK),found that counterfeit
bills, including US dollars, Chinese yuan, and Japanese yen, were
circulating in massive amounts in North Korea and regions
bordering between China and North Korea. The survey results also
revealed that North Korea is saturated with the bogus bills due
to US-imposed financial sanctions and its strict crackdown on
that country for its money laundering and the circulation of the
counterfeit currency it has printed.

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This April, a RENK member interviewed five men and women in their
30s-60s living in Pyongannamdo, Hamgyongpukdo, Hamgyongnamdo, or
Hwanghaenamdo in North Korea about bogus bills and other matters.
With the departure of this member from North Korea to China, RENK
tabulated the results of the survey.

A male drug smuggler in his 30s said that he had sold stimulant
drugs at the price of 610,000 yen to someone in a place near the
China-North Korea border and afterwards he had found the money he
received in yen was all counterfeit. In a stimulant drug deal,
there is no practice to make sure whether money or drugs are fake
or genuine at the time of their exchange. So this man was unable
to make sure whether the money was real.

According to this man, a North Korean defector now living in
South Korea sent 20,000 dollars via a secret remittance channel
last December to his relative living in North Korea, but his
money was converted into fake 100 dollars by a North Korean
border guard.

In the case of a trader in his 40s, he crossed the border to meet
with his relative living in China, but he was detained by Chinese
security authorities and was handed over to an organization
affiliated with North Korea's People's Security Ministry (police
organization). An official from the organization seized the 5,000
Chinese yuan the trader had before questioning and after the
questioning returned the money to him, but he found that of the
5,000 yuan returned to him, 3,000 yuan had been switched to fake
bills.

Kansai University Professor Lee Young Hwa, director of RENK, gave
this analysis about the recent survey results: "No doubt North
Korea has had a hand in making and circulating fake bills as a
national project, but it seems to be becoming difficult to
circulate fake bills outside the country because of the impact of
America's sanctions on that country. There seems to be a
considerable number of poorly-made counterfeit bills mixed with
sophisticated ones."

13) Antiterrorism measures; METI plans to expand items subject to
embargo to precious metals

ASAHI (Page 3) (Excerpts)
June 12, 2006

The Ministry of Economy, Trade, and Industry (METI) plans to
reinforce its trade control system, including increasing the
number of items subject to the export ban, as part of measures to
prevent terrorism. Following a series of illegal exports of
equipment that can be converted for military use, METI has
decided to revise the government ordinance regarding the Foreign
Exchange and Foreign Trade Control Law in compliance with a UNSC
resolution that seeks stronger antiterrorism measures.

The existing domestic law prohibits exports of weapons of mass
destruction and materials that are convertible for military use
and money transfers to international terrorist organizations and
terrorists designated by the UNSC and other organizations. The
revised law will ban exports of general cargo as well. It will
thus become impossible to send precious metals, which can easily
be converted into money.

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Under the revised law, control of exports to Iran, Iraq, North
Korea, and Libya, which are suspected of developing weapons of
mass destruction, will also be tightened. It has thus far been
possible to export even items that are convertible for military
use if the value of such cargo was below 50,000 yen. The revised
law will require permission for exports of such goods. This is
designed to prevent exports of second-hand electronic equipment,
such as sonar, which detect the movements of submarines, at low
prices.

14) Minshuto head Ozawa certain to be reelected as many party
members call for his remaining in presidency

MAINICHI (Page 1) (Full)
June 12, 2006

It has now become certain that Minshuto (Democratic Party of
Japan) President Ichiro Ozawa will be reelected in the leadership
election slated for September. Ozawa is determined to keep the
present executive lineup, including Acting President Naoto Kan
and Secretary General Yukio Hatoyama. Given that, many junior and
mid-level lawmakers in the main opposition party are now
supporting the maintaining of the present unanimous party
arrangement. Attention is now on whether a rival candidate will
run for the race, but chances are that Ozawa will be reelected
without going through an election.

Ozawa said yesterday in Aomori City that he would make public a
basic policy of the party before the presidential race.

Ozawa's term will expire at the end of September since he assumed
in April after his predecessor Seiji Maehara had stepped down. He
has secured a certain level of appreciation from the party
members because of the party's victory in the April Lower House
by-election for Chiba No. 7 constituency and the success in
preventing controversial bills from being passed during the
current Diet session. Therefore, in addition to the pro-Ozawa
group, including Kan, Hatoyama and lawmakers coming from the
former Social Democratic Party, junior lawmakers, who have
distanced themselves from Ozawa, have gradually called for
Ozawa's staying at the helm.

In addition to its Diet members, the largest opposition allows
its rank-and-file members and supporters to vote in the
presidential election. Some party members are working on fielding
a rival candidate against Ozawa. Even if a rival candidate is
fielded, it will be difficult for the candidate to compete with
Ozawa.

15) Ozawa favors upgrading Defense Agency to ministry

ASAHI (Page 3) (Full)
June 12, 2006

Ichiro Ozawa, president of the leading opposition Democratic
Party of Japan (Minshuto),has expressed his approval of
upgrading the Defense Agency to the status of a ministry. "The
obligation of national defense should properly assigned to an
organization of the state," Ozawa said in a speech he delivered
in the city of Aomori yesterday. "We should make (the defense
agency) into a proper ministry," Ozawa added. However, Ozawa

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criticized the government for its introduction of relevant bills
to the Diet at the final stage of its current session. He said:
"It's irresponsible that the government suddenly presented the
bills, without even debate on security policy. I can't support
the Koizumi cabinet's way of doing things."

16) Poll: 54% of political party supporters voted for different
party

TOKYO SHIMBUN (Page 11) (Full)
June 11, 2006

An estimated 54% of those who support a particular political
party say they have voted for a different political party or its
candidate, it was learned from a nationwide public opinion survey
conducted by the Japan Polling Organization on June 3-4 to probe
into the political awareness of the nation's voting population,
including unaffiliated voters who are said to affect the outcome
of elections. The poll found that the core of public support for
political parties was actually about half of what it seems, and
the findings also show that the trends of those moderate in their
support for political parties and those with no particular party
affiliation hold the key to the outcome of elections.

A public opinion survey of the nation's unaffiliated voting
population was last conducted in December 1998 when the Obuchi
cabinet was in office. Among those who have no political party to
support, the proportion of those who are interested in politics
has increased from 56% in the last survey to 62% in the latest
survey.

In the latest survey, 78% answered "yes" when asked if they were
interested in politics. Respondents were also asked which
political party they supported. In response to this question, a
total of 77% gave the names of specific political parties, such
as the Liberal Democratic Party and the Democratic Party of
Japan. Among them, 54% answered "yes" when asked if they have
ever voted for a political party other than the one they used to
support or if they have otherwise voted for a candidate on the
ticket of a political party other than the one they used to
support in recent elections for the House of Representatives and
the House of Councillors.

Note:percentages rounded off.

Polling methodology: For the survey, a total of 3,000 persons
were sampled out of males and females aged 20 and over at 250
locations throughout the country on a stratified two-stage random-
sampling basis, so as to epitomize the nation's voting population
of more than a 100 million. The survey was conducted over a
period of two days, June 3-4, on a face-to-face interview basis.
Answers were obtained from 1,787 persons, excluding those who
could not be interviewed because of their having moved away or
being on a trip, or for other reasons. The retrieval rate was
59.6%.

17) Poll: 80% feel interpersonal connections weakening

YOMIURI (Page 2) (Abridged)
June 12, 2006

In a recent nationwide face-to-face public opinion survey

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conducted by the Yomiuri Shimbun, 80% answered "yes" when asked
if they thought of themselves as becoming less sociable or if
they thought their interpersonal ties were weakening, up
7percentage points from the previous survey taken in July 2000.
The proportion of those who answered "yes" marked a rapid
increase in medium-size cities, small cities, towns, and
villages, rather than in big cities. The poll shows that an
increasing number of people are feeling a lack of human
relationships not only in big cities but also throughout the
country.

The survey was conducted May 13-14. In the survey, 80% answered
"yes" when asked if they thought their interpersonal ties were
becoming weaker, with 19% saying "no."

"Yes" answers accounted for 81% in medium-size cities with a
population of more than 100,000, excluding Tokyo's 23 wards and
government-designated cities. Among other city categories, the
"yes" proportion was 80% in small cities with a population of
less than 100,000; 78% in big cities (i.e., Tokyo's 23 wards and
government-designated cities); 75% in towns and villages. The
figure in big cities was up 3percentage points from the last
survey. However, there were substantial increases in other city
categories as thepercentage was up 6 points in medium-size
cities, towns, and villages, and up 10 points in small cities.

In the breakdown of reasons, 49% said that was because many more
people feel it troublesome to keep in touch with others. Among
other reasons, 48% said that was because many more people cannot
understand the positions of others, with 48% saying many more
people spend time playing video games alone or using a personal
computer.

SCHIEFFER