DAILY SUMMARY OF JAPANESE PRESS 06/16/06

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SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 06/16/06


INDEX:

(1) Decision to withdraw GSDF from Iraq to come this month,
conditioned on transfer of public security to Iraqi forces

(2) Koizumi, Mori ostensibly sit on fence regarding Abe, Fukuda
candidacies; exchange views on LDP presidential race

(3) Interview with former Prime Minister Yoshiro Mori on LDP
presidential race

(4) Abe supporters (Part 3): Inactive original supporters

(5) Interview with Heizo Takenaka on achievements of Koizumi
administration over five years (Part 1): Fight with bureaucrats
was hard, with limited number of able human resources

(6) Editorial: No problem about nuclear flattop's safety?

(7) FTC to review merger screening guidelines, taking US-style
oligopoly standards into account

(8) "Hissen" column: Memories from days gone by

ARTICLES:

(1) Decision to withdraw GSDF from Iraq to come this month,
conditioned on transfer of public security to Iraqi forces

ASAHI (Top play) (Excerpt)
Evening, June 16, 2006

The government has firmed up its intention to decide this month
on the withdrawal of Ground Self-Defense Force (GSDF) troops
stationed in Samawah in the southern part of Iraq. The reason is
because of the outlook that public security authority for Musanna
Province that includes Samawah will be returned to Iraq's
official government possibly next week. Upon receiving Prime
Minister Koizumi's final decision, the withdrawal could come out
prior to the Japan-US summit meeting on June 29. The Prime
Minister has it firmly in mind to bring about the withdrawal of
GSDF by the end of September, when his term in office expires.
The government's plan is to complete the move of the GSDF to
Kuwait in about one month, so the pullout could be over by mid-
August.

(2) Koizumi, Mori ostensibly sit on fence regarding Abe, Fukuda
candidacies; exchange views on LDP presidential race

NIHON KEIZAI (Page 2) (Full)
June 16, 2006

Prime Minister Junichiro Koizumi held a one-hour meeting last
nigh at a hotel in Tokyo with former Prime Minister Yoshiro Mori,
who heads the largest faction of the Liberal Democratic Party
(LDP). With all eyes now focused on the two prospective post-
Koizumi contenders, Koizumi and Mori agreed to wait and
ostensibly see the moves of Chief Cabinet Secretary Shinzo Abe
and former Chief Cabinet Secretary Yasuo Fukuda in connection
with the September LDP presidential election. Mori expressed his
intention to step down from the faction's chairmanship following
Koizumi's withdrawal from the LDP presidency. He then asked
Koizumi to return to the faction, but the prime minister turned

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down the offer.

Mori explained the contents of the meeting to reporters.

Mori told Koizumi, "If you come back to the faction, everything
will be resolved." Koizumi, however, responded: "I will not
return. Since I assumed the prime minister's post after quitting
the faction's membership, it does not make sense for me to rejoin
the faction."

Against the background of Mori's intention to step down from the
faction's chairmanship, there is a question of how the faction
should treat Abe and Fukuda

In a meeting of senior Mori faction members on June 14, it was
learned that many in the faction favored Abe as a successor to
Koizumi. Fukuda has yet to clarify his position toward the
presidential race. If Abe in the end becomes the next prime
minister, how to treat Fukuda will become even more difficult for
Mori.

In January, Mori sounded out Fukuda to become the faction's
acting head, but Fukuda refused. Mori seems to have the notion
that if Abe becomes prime minister, Fukuda would then head the
faction.

In the meeting last night, Koizumi referred to moves by other
factions, saying, "I wonder whether(three factions hailing from
the former Miyazawa faction) will re-form themselves into the
Kochikai (name of the defunct faction). Mori then said, "It would
be extremely difficult for them to bury the hatchet for the
common good."

Other factions held meetings yesterday. The Tsushima, Ibuki and
Nikai factions shared the view in a meeting of their secretaries
general that it would be important to choose a person who could
become their standard-bearer in next year's House of Councillors
election as the next LDP president. The Niwa-Koga, Tanigaki, and
Kono factions, members of which hailed from the former Miyazawa
faction (Kochikai),agreed to strengthen their cooperative ties,
letting junior members attend meetings.

A nonpartisan parliamentary group headed by Taku Yamasaki has
issued a set of proposals calling on the government to erect a
secular national peace memorial. Fukuda is also a member of the
group.

The group will make Asia diplomacy into a major campaign issue,
aiming at a rallying together of forces. They will focus on the
improvement of relations with China and South Korea, strained due
to Koizumi's five visits to Yasukuni Shrine,.

About 30 lawmakers, who were elected for the first time to the
Diet last year, held a meeting yesterday, in which they decided
to urge the party executive to take leadership in endorsing
candidates for the next Lower House election. They will try to
gain political sway.

The current regular session of the Diet is to end today
essentially. The LDP has already been dominated by the
presidential race though there are three months to go before the
election.


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(3) Interview with former Prime Minister Yoshiro Mori on LDP
presidential race

ASAHI (Page 4) (Abridged)
June 16, 2006

Asahi: In your view, what are the most important qualifications
required of a person replacing Prime Minister Koizumi, who has
been in office for five years?

Mori: The person has to have a gentle nature and the capability
of healing (the country). Japan will crumble unless politics
constantly gives warm consideration to local areas across Japan.
If urbanites would go, 'We don't want our tax money to be spent
on rural areas,' then rural people would say, 'Then who is going
to take risks associated with nuclear power plants and military
bases?' I'm afraid the Koizumi reform drive has encouraged such a
trend to some extent.

Asahi: Are you suggesting that the LDP may not be able to achieve
a victory in the House of Councillors election next summer by
just continuing with the Koizumi reform drive?

Mori: The LDP will lose if people think 'nothing has changed.'
It's important for people to think 'The LDP has been considerate
toward local communities as well.' We must not show any weakness
to Minshuto (Democratic Party of Japan),which has no principles.

Asahi: Mr. Abe has an image of a "direct descendant of Mr.
Koizumi."

Mori: The prime minister and the chief cabinet secretary are
inseparable. Prime Minister Koizumi seems to have been telling
many things to Mr. Abe for his own good. In any case, with his
tenure as chief cabinet secretary nearing an end, Mr. Abe should
call a spade a spade in dealing with the prime minister. Speaking
in one voice with Prime Minister Koizumi has both pluses and
minuses.

Asahi: Did you talked to Mr. Abe and former Chief Cabinet
Secretary Yasuo Fukuda to learn of what's in their hearts?

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Mori: There was an opportunity to talk to Mr. Abe, and I think I
know his feelings pretty well. He said, 'Public opinion has been
pushing me. If I refuse it, I won't be able to fulfill my
political mission.' If fulfilling it was his mission, backing
someone else could be his mission as well. Mr. Fukuda hasn't told
me anything. He simply said, 'It's too early (to touch on the
presidential race).'

It's not bad for two persons from the same faction to run in the
race, but the two persons must talk things out first. They should
discuss, for instance, what must be done for the country, and if
their views happened to coincide, they should go deeper from
there. They no longer need Mr. Koizumi's encouragement or my
advice.

Asahi: If you don't want to break up the Mori faction, there is
no other way but to pull the faction together with Mr. Abe, who
is popular in the faction, is there?

Mori: That could be one approach, there are some people who say,
'My personal preference is Abe but I will follow the chairman's

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view in the end.'

Asahi: There are vocal calls outside the faction for Mr. Fukuda,
aren't there?

Mori: There are all sorts of views. For some, rejuvenation is not
good because it might deprive them of their chances. Some others
fear that Mr. Abe's overwhelming victory would throw them out of
the mainstream.

Asahi: Prime Minister Koizumi clearly indicated that he would
eventually back someone -- designation of his successor, so to
speak.

Mori: Everyone has been working hard for Mr. Koizumi. People are
quick to mention only Fukuda and Abe. But we shouldn't forget
Foreign Minister Aso and Finance Minister Tanigaki in the Koizumi
cabinet. They have all assisted Mr. Koizumi. Both Abe and Fukuda
are like sons of our family (Mori faction),and we shouldn't
discuss who should go first.

(4) Abe supporters (Part 3): Inactive original supporters

TOKYO SHIMBUN (Page 2) (Abridged)
June 15, 2006

The Parliamentary League to Support a Second Chance held its
inaugural meeting at the Liberal Democratic Party headquarters on
June 2. The league is a de facto support group for Chief Cabinet
Secretary Shinzo Abe, 51, for the upcoming LDP presidential

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election. About 20 minutes into the session, House of Councillors
member Ichita Yamamoto, 48, had to leave the hall to attend
funeral services. Yamamoto regretted having to leave the session
so early, but he was happy at the same time. "Good. The first
stage in the strategy for the LDP presidential race has now been
completed," Yamamoto said to himself.

Yamamoto feared that calls for keeping Abe in reserve and out of
the race would grow louder in order to maintain factional
balance. The attendance of nearly 100 lawmakers at the league's
inaugural meeting indicated that such calls would now subside,
and Yamamoto felt relieved.

But Yamamoto's early departure from the meeting made another
participant speculate that he was being left out of the loop.

In fact, Yamamoto is not an organizer of the league. He was only
recruited by Isshu Sugawara, 44, in late May.

No traditional "Abe loyalist," including Yamamoto, played major
roles in launching the league.

Such dyed-in-the-wool Abe supporters as Yasuhisa Shiozaki, 55,
and Hiroshige Seko, 43, are rank-and-file league members, as is
Yamamoto. Nobuteru Ishihara, 49, and others did not show up at
the inaugural meeting.

Shiozaki and others were once dubbed a "new policy breed," but
today they are like "big brothers" to the junior members, along
with Abe.

They are supposed to be serving as engines to propel Abe to the
LDP presidency, but they have been inactive.

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The reason is simple. Being extremely close to Abe, they cannot
dash ahead toward the presidential goal while Abe is still
committed to his cabinet duties.

Shiozaki and others are expected to play central roles in
producing Abe's manifesto, once he officially announces his
candidacy.

But rumor has it that the establishment of the league by Yuji
Yamamoto, 54, and other junior members has left an unpleasant
aftertaste for Shiozaki and other "big brothers."

In late May, a league organizer asked an original Abe loyalist to
join the group. The loyalist in response said quietly: "The plan
will fail. Don't bring shame on yourself." The organizer
immediately sensed the loyalist's ill feelings toward the league.

Abe supporters are tasked now with eliminating the subtle discord
that exists between the original supporters and league
executives.

(5) Interview with Heizo Takenaka on achievements of Koizumi
administration over five years (Part 1): Fight with bureaucrats
was hard, with limited number of able human resources

ASAHI (Page 15) (Full)
June 16, 2006

The last Diet session for the Koizumi administration ends today.
Various evaluations have been made about the Prime Minister's
reform initiative. The Asahi Shimbun interviewed Minister of
International Affairs and Communications Heizo Takenaka, who took
the lead in promoting the reform drive, about how he evaluates
the administration's achievements over the past five years.

(Interviewed by editorial board members Atsushi Yamada, Hiroshi
Hoshi)

Hoshi: You are the only one who has held a cabinet post over the
entire five years since the launching of the Koizumi
administration. How do you evaluate that period?

"A so-called guerrilla unit - composed of five to 10 members -
proposed privatizing postal services. The Council on Economic and
Fiscal Policy worked out its basic policy, and the post of
minister for postal privatization was set up in the Cabinet
Secretariat. Because the new post was placed under the prime

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minister, the postal privatization task was successfully carried
through. If the task had been left in the hands of officials of
the former Ministry of Posts and Telecommunications, postal
services would never have been privatized, although there are
some areas in which bureaucrats are taking charge of reform."

Hoshi: You have fought with bureaucrats over the last five years.
Listening to recent Diet questions to you, I feel that
bureaucrats might have drafted some of the questions from both
the ruling and opposition camps.

"I also have the impression that government officials have
exerted influence widely over the ruling and opposition blocs. It
is true that since carrying out politics and policymaking are a
high-level knowledge-intensive industry, it is also necessary to

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benefit from the bureaucrats' accumulated knowledge. Only a
limited number of persons can see through their plots and come up
with clever ideas equivalent to theirs. Under such a
circumstance, it is very difficult to make and implement reform
plans over negative reactions from bureaucrats."

Yamada: Recently, the Liberal Democratic Party and the opposition
camp have turned out lawmakers equipped with skills in
policymaking.

"There are now many junior members who hailed from other circles
than the bureaucracy. While many of them are good at
policymaking, they also have ties to special interest groups."

Yamada: Don't you feel that there is a limit to reforms carried
out under the LDP administration? I cannot understand why you
joined the LDP.

"I was satisfied with being an academic. I had never thought that
I would become a politician. But I decided to help Mr. Koizumi in
response to his request, because I though it was a miracle that a
person like Mr. Koizumi became LDP president and prime minister.
This miracle will end this September. I am very pessimistic about
post-Koizumi politics in Japan."

Hoshi: Academics make judgments based on whether policies are
proper or not. Now that you joined the political world, a quest
for winning, for forming an administration or overthrowing this
or that person, has also become your task, hasn't it?

"I think it is also a kind of victory to use our ingenuity and
bring about a success."

Yamada: What are tasks left unfinished and what was most
disappointing to you?

"The goals I aimed for have all been implemented, including the
disposal of nonperforming loans and the privatization of postal
services. It is somewhat regrettable, though, to see the plan of
advancing economic and fiscal policies in an integrated manner
has returned to a clean state. For the ongoing reform of
telecommunications and broadcasting, I would like to pave the way
based on an agreement between the government and the ruling camp.

The fourth round of Takenaka bashing is now going on. The first
bashing occurred when the first Basic Policies for Economic and
Fiscal Management was drawn up. The second one came in reaction
to the reform of the financial system, and this was most
intensified. The third one came against postal reform. In these
three rounds of bashing, criticism came from politicians, and
they tried to sack me, so I was scared. This time, though,
bureaucrats have reacted negatively, so I have no keen sense of
tension, though the feeling is unpleasant."
(To be continued)

(6) Editorial: No problem about nuclear flattop's safety?

TOKYO SHIMBUN (Page 5) (Full)
June 16, 2006

The US Navy's Yokosuka base in Kanagawa Prefecture will be the
first in Japan to deploy a nuclear-powered aircraft carrier. The
naval base is located near densely populated areas. In the event

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of an accident, the nuclear flattop would bring about a serious
disaster. We wonder if there is no problem about its safety. The
government should do all it can to dissolve the anxieties of base-
hosting local communities.

Yokosuka City's Mayor Ryoichi Kabaya has now accepted the US
Navy's planned deployment of a nuclear-powered aircraft carrier
to his city. In response, the Japanese and US governments decided
yesterday to dredge the seafloor near a berth at the base to
homeport the nuclear flattop in 2008. They are apparently going
great guns to the point of excess.

The USS Kitty Hawk, a conventional aircraft carrier currently
homeported at Yokosuka, will be mothballed in 2008. Kanagawa
Prefecture and Yokosuka City have asked the US Navy to replace
the Kitty Hawk with another conventional flattop.

However, the United States no longer builds any conventional
aircraft carriers. The US government once considered the idea of
renovating the USS John F. Kennedy, a superannuated conventional
carrier, to extend its life and replace the Kitty Hawk. In the
end, however, the US government decided to deploy the USS George
Washington, a nuclear-powered aircraft carrier. The United States
considered its military judgment first and ignored the wishes of
Yokosuka citizens.

Of course, Yokosuka's local communities opposed the nuclear
carrier deployment. They have not changed their minds to favor
it. The mayor stated that he would accept the planned deployment
of a nuclear carrier to Yokosuka. It was a tough choice for he
was sure that the government would not think twice about his
opposition. If that is the case, the mayor wants the government
to listen to local requests for safeguards. We want the Japanese
government to realize that point.

One of our primary concerns is safety. The US government has
underscored that nuclear-powered US warships have made over 1,200
visits to Japan since 1964 but there has never been a single
incident of damage to human health or the environment. However,
the US government has not unveiled technical data about nuclear
reactors. It is an obvious fact that Yokosuka will shoulder
unpredictable danger.

The US government has told the Japanese government that the
George Washington will stop its nuclear reactors in port and will
not repair its nuclear reactors nor will replace its nuclear rods
in Japan. However, Japan has no ways to verify that. This cannot
wipe out local anxieties.

In the case of nuclear power plants, radioactive leakage and
other accidents are to be reported to the government and
municipalities. However, what about US warships? Their accidents,
if not reported at once, could bring about serious disasters.

The mayor has requested the government to work on the US Navy to
enter into a mutual assistance agreement in preparation for
nuclear disasters and other eventualities and to participate in
local disaster drills. In addition, the mayor has also asked the
government to reinforce its radiological detection setup at the
base and in its environs. The mayor may well ask the government
to do so.

Japan, an atomic-bombed nation, has a strong sense of resistance

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to the use of nuclear energy for military purposes. Even so, the
US Navy will deploy a nuclear carrier to Yokosuka. We want the
Japanese and US governments to do whatever it can for the safety
of local residents.

(7) FTC to review merger screening guidelines, taking US-style
oligopoly standards into account

NIHON KEIZAI (Page 5) (Full)
June 16, 2006

The Fair Trade Commission (FTC) has decided to revise its merger
screening guidelines. It will undertake the work with focus on
efforts to scrap the current share-cap system, which virtually
authorizes mergers if the domestic share of a merged company is
below 35%, and adopt a system similar to that of the US to be
used when judging whether applied mergers should be authorized or
not, based on the degree of the oligopoly of the market in
question. However, in many cases, it is unclear whether these
revisions will lead to deregulation as sought by industrial
circles and the Ministry of Economy, Trade and Industry (METI).

The move for the revision is in response to a call from
industrial circles. According to the results of screenings
carried out from fiscal 2002 through fiscal 2004, more than 80%
of applied mergers with their after-merger market share between
35% and 50% were judged as having no problems and deemed in
compliance with the Anti-Monopoly Law. In response to a rise in
calls for changing the merger guidelines so that companies find
it easier to decide to reorganize themselves, if there are no
problems even if their after-merger market share tops 35%, METI
has come up with a plan to ease the share-cap rule to below 50%.

Following this, FTC Secretary General Akinori Uesugi during a
press conference on June 14 noted: "If there is misunderstanding
that it is not possible for companies to merge, if their after-
merger market share tops 35%, it is necessary to change the
guidelines." However, the FTC is opposing the METI proposal,
noting, "In view of consistency with international guidelines, it
is not possible to simplistically raise the share-cap." Instead,
the FTC is eyeing the US guidelines.

In the US, the propriety of mergers is judged, based on the
degree of the oligopoly of higher-ranked companies in the market
as a whole to which they belong -- the Herfindahl-Hirschman Index
(HHI) worked out, by separately squaring the share of each
company to be merged and adding their figures. An after-merger
market share cannot provide direct information for making a
decision. For instance, if the HHI of the overall industry
increases by more than 100 to over 1,800 as a result of a merger,
the applied merger will have to undergo a strict screening, as it
is regarded as posing many problems. The FTC said, "The HII
indicates a more accurate competitive situation of the market,
such as price compelling power. Japan's present guidelines also
include such conditions as "below HHI 1,800." Chances are that if
Japan shifts its guidelines to the US-type, discarding the share
standard, the freedom of reorganization will increase in less
oligopolistic industries.

However, even in the US, a large industrial organization that
brings about a company with a market share of 50%, infringes on
the guidelines. In industries that are already oligopolistic,
guidelines will become stricter. For instance, Nippon Steel Corp.

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with a crude steel share of approximately 30% and Kobe Steel with
such a share of about 7%, can merge under the present guidelines,
but under the US method, their merger will be judged as
problematical, because the HHI of leading companies in the steel
industry is already over 1,800, and the HHI will increase by 400
if the two companies merge.

However, regarding the HHI, there is a view that it is not easy
to calculate shares of all companies. For this reason, the FTC
will plan to include a regulation in the guidelines: "Mergers
that bring about a market share of 35% are possible, if they do
not lead to restrictions on competition." In any case, there is a
strong possibility that revisions will not meet METI's desire to
accelerate Japanese companies' reorganization, thereby enhancing
their international competitiveness. The FTC's study started next
spring will likely encounter complications.

(8) "Hissen" column: Memories from days gone by

TOKYO SHIMBUN (Page 1) (Full)
June 16, 2006

After the end of World War II, June 15 was long remembered as the
day Japan and the United States entered into their bilateral
security treaty. In those days, demonstrators crying out against
the security pact besieged the Diet. This now appears to have
finally gone out of people's memories.

Yesterday, 46 years later, we reported the Yokosuka mayor's
clarification of his intention before his city's municipal
assembly to accept the US Navy's planned deployment of the USS
George Washington, a nuclear-powered aircraft carrier, to its
Yokosuka base. That is because the government assured the safety
of the aircraft carrier's nuclear reactors, the mayor was quoted
as saying. It's strange enough to argue about the safety of
weapons that are used to kill people. For now, let us set aside
such a curious argument.

Security arrangements between Japan and the United States have
now turned out to be a bilateral alliance in the US military's
global transformation. Japan is now playing a part in the United
States' global strategy. Last year, Japan's defense spending
totaled 5.1864 trillion yen, or 45.3 billion dollars in US
currency. This was the fourth largest amount of defense spending
in the world-and one billion dollars more than China's.

In the years ahead, Japan is expected to pay 3 trillion yen,
apart from its defense budget slot, to share the cost of
realigning US military bases in Japan. The government made a
cabinet decision on June 9 to upgrade the Defense Agency to the
status of a ministry and has introduced a package of relevant
legislative measures to the Diet. The landscape of Japan has thus
changed over its national security.

Tokyo Gov. Ishihara recently wrote for a monthly magazine that
featured a battle of words over patriotism. In his essay,
Ishihara was fed up with young people who have never known Japan
and the United States were once enemies at war. Ishihara insisted
on the necessity of teaching young people the modern and
contemporary histories of Japan. Ishihara writes that he was once
asked by a US lawmaker about what lies at the bottom of his
mindset toward the United States. Ishihara says he told the US
lawmaker that it's based on the hostility he had felt when he was

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strafed by a US carrier-borne fighter plane.

We must also teach the history of Japan that restarted as a
pacifist nation after the end of WWII. In December 1967, the Sato
cabinet set forth the so-called three nonnuclear principles of
not producing, possessing or allowing nuclear weapons into the
country. This triple nonnuclear doctrine remains Japan's national
policy even now. We must also teach this fact. In January 1968,
Sasebo citizens stood in the way of the USS Enterprise, a nuclear-
powered US aircraft carrier, against its port entry. We must
teach this fact, too. Bygone days must not fade out of our
memories.

SCHIEFFER