DAILY SUMMARY OF JAPANESE PRESS 06/15/06

UNCLAS SECTION 01 OF 12 TOKYO 003319 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 06/15/06 INDEX: (1) Defense Agency plans to cut 7,000 personnel (2) Gov't to tighten trade controls for antiterrorist international cooperation (3) LDP panel decides on annual 4% cut in ODA budget (4) Opinion column -- Need for explanation about low estimated number of BSE-infected cattle in US (5) Reading the data on finances: Deregulation helps improve potential growth rate (6) Period of residency for foreign workers to be extended to five years, according to package of LDP proposals; Foreign students to be granted one year to find job (7) ABE supporters (Part 1): Huge "second chance" league launched to counterattack Fukuda (8) ABE supporters (Part 2): A highly energetic group of "rogue samurai" launches 94-member second chance parliamentary league (9) Japan embassy in US rebuts whaling critics: US newspaper (10) Editorial: Japan should stress need for continued whaling on scientific basis (11) Editorial: BOJ governor must quickly resign ARTICLES: (1) Defense Agency plans to cut 7,000 personnel SANKEI (Page 2) (Full) June 15, 2006 The Defense Agency has presented a government administrative reform task force's secretariat with a plan to reduce a total of 7,000 personnel, officials said yesterday. According to the plan, the agency will reduce about 6,000 in the Self-Defense Forces. In addition, the agency will also reduce about 1,000 in the National Defense Medical College (NDMC),located in the city of Tokorozawa, Saitama Prefecture, and in NDMC hospitals along with their status change to independent administrative corporations. As a result of incorporating the NDMC as a standalone entity, the National Defense Academy, located in the city of Yokosuka, Kanagawa Prefecture, is also likely to be on the agenda over the advisability of changing its administrative status to a standalone. With the enactment of a law for the promotion of administrative reform, the government plans to reduce more than 5% over fiscal 2005 in the employment of national public service personnel at the end of fiscal 2010, thereby reducing its personnel costs. The government will shortly made a cabinet decision on its overall personnel reduction plan. The task force secretariat makes no exception of the Defense Agency and has requested the agency to reduce 5% or about 12,000 personnel. The agency, however, insisted that the Self-Defense TOKYO 00003319 002 OF 012 Forces should not be in the same category with other government employees. The agency has now hammered out a plan to carry out a personnel reduction of about 6,000 mainly in the Ground, Maritime, and Air Self-Defense Forces' logistics divisions, including administrative and welfare sections. But the planned reduction is half the level requested. So the Defense Agency chose to incorporate the NDMC and its hospitals with independent administrative status. This choice was aimed in part to underscore the agency's belt-tightening of its organization, according to a senior official of the agency. The NDMC and its hospitals currently have a total of about 1,000 personnel on their payroll. They include a teaching staff of about 250, a clerical staff of about 220, and a nursing staff of about 400. However, all of them will be nongovernmental employees with the NDMC and its hospitals becoming incorporated with independent administrative status. However, NDMC students, monthly provided with about 100,000 yen, will retain their current status of special government employees. Deregulation is under way with other national universities incorporating their medical departments as independent administrative entities. Meanwhile, the NDMC has been left behind the cutting edge of medical treatment against the backdrop of its stagnated research with private- and government-sector institutions, according to a senior official of the agency. The agency is also aiming to improve the profitability of NDMC hospitals with better services, including medical examinations for local communities. In the Defense Agency community, however, some people are cautious about the idea of incorporating the NDMC as an independent administrative body since the NDMC is a training institute of SDF medical officers. "The government may also consider incorporating the National Defense Academy, which is the gateway for the SDF leadership," one SDF staff officer said. (2) Gov't to tighten trade controls for antiterrorist international cooperation SANKEI (Page 2) (Abridged) June 15, 2006 The Ministry of Economy, Trade and Industry (METI) decided yesterday to strengthen trade controls in order to prevent Japanese products from being used for weapons of mass destruction (WMD) or terrorism. METI is also preparing legislative measures not only to embargo materials related to nuclear and biochemical weapons but also to halt their transshipments and transits through Japan. The government fears that terrorists may take advantage of trade as a loophole to get through the dragnet of economic sanctions including asset freezing. METI will therefore consider a system that can prohibit all export-import trade transactions for terrorist-related groups and individuals. The government will also aim at even more effective trade control under the international regime of counterterrorism. The Industrial Structure Council, an advisory panel for the METI minister, will hold a subcommittee meeting today. In this meeting, METI will show its plan. METI will then set about its review of cabinet orders and ministry ordinances. METI is thinking of revising the Foreign Exchange and Foreign Trade TOKYO 00003319 003 OF 012 Control Law and other relevant laws. The government will step up its surveillance of port calls and transits in Japan for WMD-convertible materials. In addition, the government will also strictly oversee Japanese companies' trade transactions via third countries. In order to heighten the effectiveness of economic sanctions against terrorists, Japan will freeze the assets of 511 individuals or groups designated as terrorists by the United Nations or Group of Eight (G-8) member nations and will also freeze their trade in its entirety, whereby the government will contain the incomings and outgoings of money. The government will invoke de facto economic sanctions in the expanded scope of trade controls. In addition, the government has also discovered more indirect exports to countries that have military potential. METI will therefore announce the names of foreign companies that were used for indirect exports. METI will call on Japanese companies not to export their products to these foreign companies. The government has not restricted trade up to 1 million yen or up to 50,000 yen for North Korea and other countries with military potential. The government will abolish this small-sum exception. (3) LDP panel decides on annual 4% cut in ODA budget MAINICHI (Page 2) (Full) Evening, June 15, 2006 The Liberal Democratic Party's Project Team on Spending Cuts decided yesterday to slash the official development assistance (ODA) budget by 4% annually for the five years starting in FY2007. In FY2006, 760 billion yen has been set aside for the ODA budget, but according to the team's calculation, the ODA budget will be reduced to 620 billion yen in FY 2011. The government has set up the goal as an international pledge of increasing the nation's ODA spending by 10 billion dollars over the total amount of ODA disbursements (8.9 billion dollars) in FY2004. The actual record for FY2005 was 13.1 billion dollars, about 4.2 billion dollars more than the previous fiscal year. The Finance Ministry has viewed it possible to augment ODA disbursements by relinquishing claims on bad loans to other countries even if the ODA budget is trimmed. The Foreign Ministry has reacted to the project team's decision to slash ODA funds, one official remarking: "In order to form pro- Japanese international opinion, an increase in ODA disbursements is necessary as an essential diplomatic means." But a Finance Ministry official commented: "Now that efforts are being made to cut spending in a strict manner within the nation, a tough review of financial assistance to other countries is also unavoidable." (4) Opinion column -- Need for explanation about low estimated number of BSE-infected cattle in US YOMIURI (Page 13) (Full) June 14, 2006 By Yoji Totsuka, special professor emeritus at Tokyo University Japan is likely to reopen its market to US beef shortly. These days, the subject of bovine spongiform encephalopahty or BSE frequently crops up in daily conversations even around me. This TOKYO 00003319 004 OF 012 is perhaps because BSE and the variant Creutzfeldt-Jacob Disease (vCJD) -- a disease that causes spongy degeneration of the brain and madness -- are allegedly closely linked to each other since the same agents are involved. The BSE issue draws strong public concern and is given large coverage by the news media. It is a serious problem, but there is something unclear about the issue. For example, is it true to say that Japan is less dangerous than the United States and the European Union (EU) in terms of the vCJD infection risk and the discovery frequency of BSE-infected cattle? Some of scientific statistics are incomprehensible to nonprofessionals. So most people may think it is better to leave data analysis to specialists, such as scientists. But I can say, it is possible to shed light on the issue from various angles in an easy, simple way by using only the statistics released. I have worked as a researcher in experimental physics and have analyzed data from various angles for many years. Based on this experience, I will show you a simple verification method that can be of help to nonprofessionals, as well. The first thing to do to reach this end is to obtain from international organizations, for instance the World Organization for Animal Health (OIE),such statistics as the numbers of vCJD patients, the numbers of discovered BSE-infected cows, and the amounts of beef consumption, and the numbers of heads of cattle raised. There is no sign of the diseases vCJD and BSE being eradicated, for even Japan and the US have one vCJD patient each. When it comes to the numbers of BSE-infected cattle, although the United States does not conduct blanket testing, the number of BSE- infected cattle in that country is estimated as of this March to be 10 or less if blanket testing were to be carried out there. This estimate, however, was done, based on several assumptions. The figure, I think, is credible enough, so I will use it. Based on the figures obtained from OIE, I will calculate the vCJD infection risk and the discovery frequency of BSE-infected cattle. Indices that will be used in this regard are two figures that can be obtained by: 1) dividing the number of the vCJD patients by the amount of beef consumption; and 2) dividing the number of BSE-infected cattle by the number of cattle raised. The chart here shows the results of this calculation. US Japan EU Number of vCJD patients (as of August 2005) 1 1 177 Number of head of BSE-infected cattle (for 2005) Estimated to be 10 or less 7 438 Number of vCJD patients per area where 10 million tons of beef consumed (as of August 2005) 0.1 1.2 24 Number of head of BSE-infected cattle discovered per group of 10 million head of cattle raised (2005) 1 or less 15 55 In terms of the number of vCJD patients occurring in each area where 10 million tons of beef are consumed, the EU has 24 such patients, followed by Japan's 1.2 and America's 0.1. As for the number of BSE-infected cattle discovered in each group of 10 TOKYO 00003319 005 OF 012 million head of cattle, the EU has 55, but Japan has 15 and the US has one or less. In both cases, Japan is in between the EU and the US, but it is not correct to say that Japan is safe from BSE. Since the cause of vCJD has yet to be made crystal clear, what Japan needs to do is to further raise its safety levels and make efforts to nip in the bud any possibilities of causing an epidemic of that disease. Assuming that the estimated number of BSE-infected cattle in the US is reliably correct, US beef, which Japan is likely to import again shortly, can be viewed as being safe. I think many Japanese like me would like the US to give a proper account of the correctness of the estimated figure in order to further ensure the safety of US beef. (5) Reading the data on finances: Deregulation helps improve potential growth rate NIHON KEIZAI (Page 5) (Full) June 15, 2006 Is Japan more strongly regulated than other countries? The Organization for Economic Cooperation and Development (OECD) conducts a survey of this kind. In the survey, regulations on some 800 items are assessed on a scale of six. The OECD made a comparison between countries with Japan's levels of regulations in 1998 as 100. According to this comparison, Japan's levels in 2003 dropped to ¶68. This was the result of regulations centering on transportation and telecommunications having been eased 30% or more. Compared to the United States and European nations, Japan's levels of regulations are lower than those of France and Germany. But the US and Britain, which addressed deregulation earlier than Japan, are far less regulated than Japan. Japan has just caught up with the US' levels in 1998. The US eased its regulations to 53 in 2003. According to the OECD, the potential economic growth of the US for 2003-2007 is predicted to be 3% on average; and that of Britain is estimated at 2.7%. These two advanced nations in terms of deregulation are predicted to have strong potential for economic growth. Meanwhile, Japan's potential economic growth is estimated to be 1.5%, the figure that is the same level as that of Germany, which resembles Japan in view of the pace of deregulation. The OECD points out that Japan still allows the government sector's strong involvement. Japan needs to push for deregulation by taking advantage of special zones for deregulation and thereby to enhance potential economic growth, which through a natural increase in tax revenues will lead to rebuilding its finances. (6) Period of residency for foreign workers to be extended to five years, according to package of LDP proposals; Foreign students to be granted one year to find job NIHON KEIZAI (Top Play) (Slightly abridged) June 13, 2006 TOKYO 00003319 006 OF 012 The Liberal Democratic Party (LDP) is now looking into comprehensive measures on foreign workers. The draft of the package was unveiled yesterday. According to the package, the period for which foreign workers are permitted to stay in Japan will be extended from three years to five years, in principle. The length of residency for foreign college graduates who want to find jobs in Japan will be extended from the current six months to one year. The aim is to secure a stable labor force with the arrival of an age of depopulation, but coordination of views on such extensions will likely encounter complications. Unified control of residency information The Special LDP Commission on the Foreign Workers Issue, chaired by Yoshio Kimura, will finalize the package of proposals before the end of the month. The LDP intends to call on the government to revise the Immigration Control Law during next year's regular Diet session at the earliest. The period of residency allowed to foreigners is, in principle, three years under the current system. The entertainment visa is one year, and the student visa is two years. Advanced technical workers in such areas as information technology, can stay for five years. When the termination of their visas draws near, foreign workers need to go to their nearest immigration control offices and submit applications for an extension. Extension of the period for which foreign workers are permitted to stay is expected to reduce troublesome procedures they have to undergo. It will also become unnecessary for them to pay fees for such procedures. As such, calls from foreigners to improve the current system have grown stronger. Out of concern over a future labor shortage, business circles are also strengthening their call that restrictions on their accepting foreign workers should be eased. The LDP is seeking to extend the period of residency allowed to foreign workers to five years, but it now plans to single out types of jobs eligible for such an extension out of consideration for the domestic employment situation. A plan to introduce a green card system like that of the US, under which foreigners with expertise and technology, such as attorneys, are awarded permanent residency, has also been floated. In assisting foreign students, the government in March permitted foreign graduates of Japanese universities to stay for up to 180 days. However, foreign students are dissatisfied with the measure, because they think that six months is not sufficient to find a job. The LDP is calling for a further extension of the period of residency. The package also included measures to avoid any impact of the extended residency of foreigners on security and trouble with entities that accept foreign workers. To this end, consideration will be given to a system under which the Justice Ministry manages foreign workers' registration information, which local governments are now in charge of, in an integrated fashion, so that their residency status after entering Japan can be correctly grasped. In order to avoid such trouble as nonpayment of wages, a system for a regular inspection of companies' foreign worker acceptance TOKYO 00003319 007 OF 012 system will be introduced. Training to nurture quality laborers and a practical technical trading system will also be proposed. (7) ABE supporters (Part 1): Huge "second chance" league launched to counterattack Fukuda TOKYO SHIMBUN (Page 2) (Abridged) June 13, 2006 Yuji Yamamoto, 54, and Yoshihide Suga 57 -- both Lower House members -- began preparing to support Chief Cabinet Secretary Shinzo Abe, 51, in late May with an eye on the Liberal Democratic Party presidential election in September. Yamamoto is a member of the Komura faction, Suga belongs to the Niwa-Koga faction, and Abe the Mori faction. A variety of opinion polls conducted in late May showed growing support for former Chief Cabinet Secretary Yasuo Fukuda, 69. The view was also prevalent that Fukuda might achieve a come-from- behind victory. Yamamoto and others had not expected Fukuda to follow ABE so closely. An innovative idea was necessary to turn the trend around. Being a cabinet minister, ABE was tied up, and former Prime Minister Yoshiro Mori, 68, who headed the faction, had also strictly ordered the members not to rally around any specific individuals. Given all those restrictions, it was extremely difficult to devise ways to divert public attention from Fukuda to Abe. They finally came up with the idea of establishing a parliamentary group to support Abe's policies -- the prototype of the Parliamentary League to Support a Second Chance. At the time, the Government's Second Chance Promotion Council, chaired by Abe, was endeavoring to map out a policy to create jobs for elderly people and job-hopping part-time workers. Yamamoto, Suga, and others speedily decided to hold an organizers' meeting on May 25 and the league's inaugural meeting on June 2. The government's promotion council was scheduled to produce an interim report on May 30. Yamamoto and others picked June 2 to learn of the contents of the interim report from ABE in person. They figured that a parliamentarian group to support ABE himself would elicit a red card, but nobody would complain about a league to support his policies. In fact, Mori and others did not openly oppose the idea of launching a new league. Yamamoto, Suga, and others persistently lobbied mid-level lawmakers to join the league, while second-term members, such as Yasutoshi Nishimura, 43, and Isshu Sugawara, 44, sold the group to junior lawmakers. Although they told the recruits that the new group had nothing to do with the presidential race, nobody bought it. Mid-level and junior members eager to back ABE readily jumped at the borderline ball, thrown by Yamamoto and others. Their willingness seemed to reflect the motive to win key posts in an TOKYO 00003319 008 OF 012 Abe administration by making clear where they stand at an early stage. Although LDP executives initially speculated that no more than 50 members would join the league, its aggressive campaign eventually put the LDP leadership on high alert. Coinciding with the group's inaugural meeting, the party leadership decided to conduct an Indonesia earthquake fund-raising drive in Tokyo and solicited the participation of junior members. "The drive is intended to squash the league," one complained. Against all odds, 94 LDP lawmakers showed up at the inaugural meeting. One member optimistically predicted that the new league would discourage Fukuda and Foreign Minister Taro Aso from running in the presidential race. Representing less than a one-fourth of the LDP membership, a group of 94 seems too small to determine the trend of the presidential race. Nevertheless, Yamamoto and other ABE supporters were overjoyed with the good start of the league, believing that it successfully held back the rise of Fukuda. (8) ABE supporters (Part 2): A highly energetic group of "rogue samurai" launches 94-member second chance parliamentary league TOKYO SHIMBUN (Page 2) (Abridged) June 14, 2006 The Parliamentary League to Support a Second Chance was launched on June 2 as a de facto support group for Chief Cabinet Secretary Shinzo Abe. But the lineup of its key members made many lawmakers somewhat uncomfortable. Shinzo ABE has a number of loyal supporters, such as Senior Vice Foreign Minister Yasuhisa Shiozaki, 55, Ichita Yamamoto, 48, and Hiroshige Seko, 43. They are second-generation lawmakers and policy experts, as is Abe. The parliamentary league has informally picked Yuji Yamamoto, 54, as its chairman, Yoshihide Suga, 57, as secretary general, and Hiroshi Kajiyama, 50, as chief of the secretariat. Totally distinct from Abe, they are a "group of rogue samurai," so to speak. They are a mismatch. They are so different and yet they are attracted to each other, as are the north and the south poles of a magnet. In the 2003 LDP presidential race, Yuji Yamamoto of the Komura faction backed former Foreign Minister Masahiko Komura, 64. Komura, who heads a small faction, fought well, garnering 54 votes. Abe, a native of Yamaguchi along with Komura, knows that Yamamoto orchestrated Komura's good fight. In the race three years ago, Suga scurried around trying to field a junior lawmaker. Although his efforts fell short of securing the necessary support from 20 Diet members, Suga's leadership was fully recognized among junior members. Inheriting the political views and determination from his father, the late Chief Cabinet Minister Seiroku Kajiyama, Hiroshi Kajiyama is often called the best supporting actor of the political world. TOKYO 00003319 009 OF 012 They are far more energetic than Abe's original supporters, such as Shiozaki. The group of "rogue samurai" is extremely appealing to ABE in seeking the party's top job. Yamamoto and other latecomers are also undoubtedly driven by the ambition to boost their presence in the party by playing a significant role in launching an ABE administration. The second chance league is a product of a meeting of the motives of ABE and the junior supports. Bringing together 94 LDP lawmakers, Yamamoto and others held an inaugural meeting of the league by fully utilizing their extensive personal ties. Abe is taking a hands-off attitude toward the league because, as a league executive puts it, he has confidence in Yamamoto, Suga, and other members. They have been in close contact with each other. Abe has not left everything to Yamamoto's group, and the group is not trying to take control of Abe's campaign team. Yamamoto envisages sharing the role with original ABE supporters by leaving a policy format, including a campaign manifesto, to Shiozaki, Seko, and other members. A combination of the policy-savvy original supporters and the highly energetic "rogue samurai" would be able to push ABE toward the summit. But it is extremely difficult for two completely different groups to resonate with each other in Nagatacho, the nation's capitol district replete with jealously and misunderstandings. (9) Japan embassy in US rebuts whaling critics: US newspaper SANKEI (Page 2) (Full) June 15, 2006 WASHINGTON-The Japanese embassy in the United States rebutted US newspaper articles that hit Japan's research whaling. The Washington Post carried the articles in its June 2 and June 5 editions. The rebuttal was also carried in the same newspaper dated June 13. In this rebuttal, the embassy recounts that Japan plans research whaling in the South Pacific Ocean for 0.1% -0.3% of all whales there. This research whaling will not affect the schools of whales there, the embassy stresses. (10) Editorial: Japan should stress need for continued whaling on scientific basis TOKYO SHIMBUN (Page 5) (Full) June 15, 2006 The International Whaling Commission (IWC) will hold its annual meeting in St. Christopher and Nevis, an island country in the Caribbean Sea, starting on June 16. Japan is ready to insist in the meeting on the need for continued whaling on a scientific basis. One Japanese government official said with a stern look: "Japan will announced a plan to hold a meeting among countries supportive of or understanding the need of whaling. We would like to aim at normalizing the IWC through this meeting." TOKYO 00003319 010 OF 012 Holding a meeting under a different framework from the IWO might serve as a trigger to break it up. But it is understandable why Japan made the decision. The establishment of the committee was initially intended to promote commercial whaling. The US, Britain, Australia, and other 12 countries set up the organization in 1948 with the purpose of protecting whales and developing the whaling industry in an orderly way. Japan joined it in 1951. In the 1960s, the US and Britain withdrew from commercial whaling. Given growing criticism of reckless catches and movements for humane treatment of animals, antiwhaling activities intensified. In 1982, a decision was made to introduce a moratorium on whaling for the next decade. Later Japan and other countries continued research whaling. The research found that more than 760,000 minke whales live in the Antarctic Ocean. The IWC Science Committee accepted the estimated figure. This number might be changed in the upcoming meeting, but it is true, as shown by information from eyewitnesses and collisions between ships and whales, that the number of whales is steadily increasing. Talks have been held since 1994 in a drive to complete the so-called Revised Management Scheme (RMS),which will be the premise for resuming commercial whaling. The RMS is a new whale stock management and monitoring system. In connection with this system, however, antiwhaling countries have brought up difficult issues related to monitoring methods, expenses, and ways of catching and killing whales. The working- level meeting this spring faltered as antiwhaling countries rejected any compromises, claiming that the introduction of the RMS would lead to resuming commercial whaling. As of now, 70 countries belong to the IWC. Excluding one country that has no voting rights, 36 countries support whaling, while the remaining 33 are against it. In order to resume whaling, though, it is necessary to obtaining support from more than three- fourths of all the member countries. Globally, antiwhaling countries still have a stronger voice. A number of developing countries are also included among the supporters, in addition to Japan, Norway, Denmark, Russia, China, and South Korea. Under the current situation, it seems difficult to reach an agreement between antiwhaling countries and supporter countries. Given that antiwhaling countries have rejected any compromise while avoiding a discussion based on scientific grounds, there is no other choice but for Japan to reveal a plan to hold a new session. Even so, a cool-headed judgment is necessary now. The IWC annual meeting is an important arena to stress the need for scientific, sustainable whaling. In a bid to secure safe and plentiful meat resources for the future, it is imperative for Japan to make persistent efforts to persuade other countries. Because the meeting will provide a good opportunity to turn around international opinion on whaling, details about the new session, including its timing, must be carefully discussed. (11) Editorial: BOJ governor must quickly resign TOKYO SHIMBUN (Page 5) (Full) June 15, 2006 TOKYO 00003319 011 OF 012 It has been revealed that Bank of Japan (BOJ) Governor Toshihiko Fukui invested 10 million yen in the Murakami Fund in the fall 1999 when he was serving as Fujitsu Research Institute president. The news has caused a stir, posing a question about the central bank's independence from the financial market. Now that he has lost public confidence, Fukui should quickly step down. This is an unprecedentedly abnormal case. Governor Fukui invested 10 million yen in the Murakami Fund established by Yoshiaki Murakami, who has been arrested on suspicion of insider trading in violation of the Securities and Exchange Law. Fukui admitted in a Diet session that he had earned profits from the investment until he cancelled the contract in February this year. Fukui said that he invested the money to back up the Murakami Fund in response to Murakami's remarks that "I have no confidence in collecting money." Confidence was indispensable for a new type of business. Fully aware of becoming a poster figure, Fukui might have volunteered to invest. The Murakami Fund is a special fund in which only limited persons or organizations can invest. When Fukui assumed the top post of the BOJ, he should have emerged from such a fund, because the central bank is required to be neutral and transparent. His failure cannot be dismissed only with the words that he was careless. The fact of his cancellation of the contract in February also makes us skeptical of Fukui's deeds. In February, the Securities and Exchange Commission and the Tokyo District Court Special Investigation Squad were conducting secret investigations into the Murakami Fund. There were even rumors saying that a criminal investigation of Murakami would be started. In March, the BOJ decided to end its monetary-easing policy. Every information on economic affairs goes to Fukui. If he cancelled the contract upon learning the circumstance, his action might come under the category of "ultimate insider trading." Ordinary people can earn little interest income with low-interest money. How much did Fukui earn profits? Some market players have begun to take the view that "since the BOJ governor owes a lot the government because of its protection of him, the BOJ may not be able to end the money-easing policy over the opposition of the government." This observation will haunt Governor Fukui forever as long as he stays on. This is detrimental to Fukui as BOJ governor. Fukui has no longer been regarded as "the governor who can implement monetary policy measures while seeing the economic situation and commodity prices in a pure and objective manner." In relations with the government, the central bank has suffered a serious injury in terms of independence. The BOJ has held talks on monetary policymaking since June 14. A removal of the policy of zero-interest rates is one of the key issues in the meeting. It can hardly be expected, though, that the governor will be able to make judgment on important issues. Fukui should resign as BOJ governor. TOKYO 00003319 012 OF 012 SCHIEFFER