Identifier
Created
Classification
Origin
06TOKYO3388
2006-06-19 08:12:00
UNCLASSIFIED
Embassy Tokyo
Cable title:  

JAPANESE MORNING PRESS HIGHLIGHTS 06/19/06

Tags:  OIIP KMDR KPAO PGOV PINR ECON ELAB JA 
pdf how-to read a cable
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RUCNDT/USMISSION USUN NEW YORK 0804
UNCLAS SECTION 01 OF 10 TOKYO 003388 

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: JAPANESE MORNING PRESS HIGHLIGHTS 06/19/06


Index:

(1) Abe a step ahead of others in LDP presidential race;
Political maneuvering intensifying over 704 votes; "Yasukuni,"
"generational change" likely to be campaign issues

(2) Potential successor to Prime Minister Koizumi: What are the
campaign issues? Part one, fiscal reconstruction; Which should be
given priority, tax increase or spending cuts?

(3) Poll on Koizumi cabinet, political parties, post-Koizumi race

(4) Poll: 49% urge BOJ gov. to quit over his investment

(5) Interview with Heizo Takenaka on achievements of Koizumi
administration over five years (Part 2): There is no serious
poverty in Japan creating social disparity

(6) Editorial: We appreciate Yokosuka's decision to accept
nuclear-powered warship deployment

(7) Editorial: Japan should take initiative in scientific
argument at IWC plenary session

ARTICLES:

(1) Abe a step ahead of others in LDP presidential race;
Political maneuvering intensifying over 704 votes; "Yasukuni,"
"generational change" likely to be campaign issues

NIHON KEIZAI (Page 3) (Abridged)
June 17, 2006

Now that the current Diet session is effectively over, potential
successors to Liberal Democratic Party President Junichiro
Koizumi will dash ahead toward the presidential goal. Although
Chief Cabinet Secretary Shinzo Abe, 51, appears to be taking the
lead in the race at present, senior LDP lawmakers critical of Abe
are expected to rally around former Chief Cabinet Secretary Yasuo
Fukuda, 69, to turn the tables. The new LDP president will be
determined by a total of 704 votes, the LDP lawmakers and local
rank-and-file members combined. Fierce campaigns have effectively
been kicked off in order to capture as many votes as possible.

404 Diet members' votes

Abe, who has been steadily gaining support in the party, told a
press conference yesterday: "There are so many things to be taken
care of, and I must devote myself to my duties for the time
being." Abe intends to announce his candidacy after the St.
Petersburg Summit in mid-July.

Abe loyalists, mostly mid-level and junior LDP lawmakers, have
launched a parliamentary league to support a second chance, a de
facto support group for Abe. A total of 94 LDP lawmakers showed
up at its inaugural meeting, exhibiting cross-factional support
for Abe.

Meanwhile, Abe's prospective rival, Fukuda, brushed aside growing
speculation of his candidacy after a Lower House plenary session
yesterday.


TOKYO 00003388 002 OF 010


In contrast to junior members who are eager to throw support
behind Abe, senior members have high hopes for Fukuda in the hope
of blocking a generational change. Both Fukuda and those senior
members are critical of Abe, who is supportive of visits to
Yasukuni Shrine by Prime Minister Koizumi. Such influential party
members as Koichi Kato and Taku Yamasaki, who are not supportive
of Abe in consideration of relations with China and South Korea,
are closely watching whether the shrine visits would become a
campaign issue.

Yamasaki and others are considering joining hands with veteran
members of the Tsushima, Ibuki, and Niwa-Koga factions who do not
have any specific individuals to support. Clamping down on Abe-
tilted junior members in those factions is also a challenge for
them.

Recent opinion polls also showed low support rates for Finance
Minister Sadakazu Tanigaki, 61, and Finance Minister Taro Aso,
65, alluding to their slow starts. Even so, Aso at a Kono faction
meeting last night expressed his eagerness to run for the LDP
presidency, describing it as his dream for the past five years.
Tanigaki, on the other hand, only indicated that he would work
hard to fulfill his duties.

Whether or not Fukuda will join the race is a matter of great
concern to many. Veteran lawmakers fear that in the event Fukuda
decides not to run in the race, they will run out of time to find
a powerful candidate in place of Fukuda.

In a meeting yesterday of LDP Lower House members, Koizumi
predicted fierce factional maneuvering, saying, "Although the
Diet session is ending, a fierce power struggle is expected to
occur in the LDP."

300 local votes: Rural areas call for special consideration,
while urban areas expect continued reform programs

The future of 300 votes to be assigned to prefectural chapters is
also a focal point. Some 1 million rank-and-file and fraternity
members, who paid membership dues for two years until the end of
last year, are eligible to cast votes. The recent trend is
characterized by a growingpercentage of "floating votes" that are
not bound by wishes of factions or support groups, as evidenced
by Koizumi's collection of 68.3% of the votes in the 2003
presidential poll.

The Nihon Keizai Shimbun conducted a telephone-based survey on
June 15-16 of secretaries general, chiefs of the secretariat, and
other executives of prefectural chapters to probe their outlooks
on the presidential race and campaign issues. Prefectural
secretaries general know local situations inside out and have

SIPDIS
strong voices toward rank-and-file members, as they in many cases
served as prefectural assembly members.

Backing the right horse

In the survey, six persons - the greatest number - pointed to Abe
as the lawmaker most suitable to become the next prime minister.
His support ranged in region from Hokkaido to Gifu to Osaka, in
addition to his home turf of Yamaguchi. Aso followed Abe with
five people (Fukuoka, Nagano, and other prefectures),and Fukuda
with three (Gunma, Shimane, and another place).

TOKYO 00003388 003 OF 010



Nearly 70% said "undecided" or "cannot answer." Many also
expressed their willingness to back Abe once he announces his
candidacy officially. A secretary general in the Tokai region
predicted that industrial organizations would back the right
horse to maintain communication channels with a new
administration so as not to be labeled as a orce of resistance.

Prefectural chapters are expecting the next president to serve as
the party's attractive standard bearer for the Upper House
election next summer. "Mr. Abe has the edge in terms of
popularity," a Tohoku region secretary general noted.

Local areas unhappy with structural reform

The survey exposed a clear difference in awareness of campaign
issues between urban and local areas. For instance, 21 party
members in Tohoku, Kyushu, and other rural areas cited the
correction of the social disparity as a major issue. In contrast,
many in urban areas, such as Kanagawa and Osaka, underline the
need for fiscal reconstruction, pension reform, and continued
reform programs.

Discontent is deeply seated in the LDP's local chapters that the
Koizumi administration has pursued structural reform at the cost
of local areas. Abe in the press conference yesterday played up
his determination to pursue policies to encourage working-class
people in rural areas. Aso also underlined the need to pay more
attention to local districts. Post-Koizumi contenders have begun
making comments with the issue of social disparity in mind.

(2) Potential successor to Prime Minister Koizumi: What are the
campaign issues? Part one, fiscal reconstruction; Which should be
given priority, tax increase or spending cuts?

NIHON KEIZAI (Page 2) (Excerpts)
June 18, 2006

Party takes initiative

Finance Minister Sadakazu Tanigaki on June 14 visited the Liberal
Democratic Party (LDP) Headquarters office of Policy Research
Council Chairman Hidenao Nakagawa, who is leading the work of
drafting a spending cut plan to be incorporated in basic policy
guidelines on economic and fiscal management and structural
reforms to be issued in July. He told Nakagawa, "I will firmly
cooperate with you." Budget bureau officials responsible for
drafting a budget for each government agency are also visiting
the Policy Research Council chairman's office. Some are even
saying, "It appears that the Finance Ministry's Budget Bureau has
moved to LDP Headquarters."

Tanigaki and State Minister for Economic and Fiscal Policy Hajime
Yosano, who is in charge of the Council on Economic and Fiscal
Policy, have shown a desire to make the tax hike argument into a
concrete deal by advocating unified reform of expenditures and
revenues.

However, Prime Minister Junichiro Koizumi in late March ordered
the drafting of a concrete plan by the LDP. Following this order,
Nakagawa has seized the initiative, taking the position that
national burden should be constrained to the minimum level

TOKYO 00003388 004 OF 010


through "thorough spending cuts." He is close to Chief Cabinet
Secretary Shinzo Abe. This has contributed to the spread of the

SIPDIS
observation that the prime minister has Abe in mind as a
candidate for his successor.

Having trouble in increasing approval ratings in opinion polls,
Tanigaki found it necessary to go halfway to talk to Nakagawa.

Yosano during a press conference on June 16 clarified his stance
of cooperating with the LDP, noting, "It is better for the
government to refrain from actively making statements at the
present stage."

Yosano, who is regarded as the fifth potential candidate
following Foreign Minister Taro Aso, Finance Minister Sadakazu
Tanigaki, former Chief Cabinet Minister Yasuo Fukuda and Chief
Cabinet Secretary Shinzo Abe, recently has been holding meetings
with mid-ranking and junior LDP members. He is also approaching
Nakagawa, with whom he has had run ins in the past over various
actions and policies. Some members of the Ibuki faction, which is
affiliated with the Nakasone faction, to which Yosano, now a non-
affiliated member, once belonged, see that his move is out of
consideration to the presidential race.

Nikai acts as go-between

In order to avoid the tax hike argument, Nakagawa wanted to
estimate an increase in tax revenues at a higher level by setting
economic growth at a slightly high level. Yosano was against this
policy. There appeared to be no way out in their economic growth
argument. The moves of Minister of Economy, Trade and Industry
(METI) Toshihiro Nikai have become entangled in this situation.

METI has then drafted an economic growth strategy targeting a
real growth rate of 2.25 a year and calculated a gap between
revenues and spending, based on a high economic growth rate that
can be attained. In the meantime, the government and the ruing
camp are aiming at a high growth rate under a growth strategy
outline. This approach has saved the faces of both Nakagawa and
Yosano.

Last year's Lower House election took place when Nikai was
serving as the chairman of the LDP Executive Council, which is
responsible for election campaigning. He approached Abe, who was
then acting chief cabinet secretary. Calling for improving
relations with China, he has much in common with Fukuda, Abe's
rival.

Because of this position, Nikai was able to act as a go-between
to reconcile Yosano and Nakagawa. Yosano is expected to receive
support from anti-Abe lawmakers in the event Fukuda does not
declare his candidacy for the presidential race. In that sense,
it is significant for Yosano to cooperate with Nakagawa, a member
of the Abe camp.

The prime minister, who has rejected the idea of raising the
consumption tax during his tenure, reiterated his stance of
giving priority to cutting expenditures at a meeting of the
National Council of Secretaries General of the LDP Local Chapters
held on June 14, "General-account spending also should be cut if
you want to avoid a tax hike, despite a substantial rise in tax
revenues."

TOKYO 00003388 005 OF 010



(3) Poll on Koizumi cabinet, political parties, post-Koizumi race

MAINICHI (Page 2) (Full)
June 19, 2006

Questions & Answers
(T = total; P = previous; M = male; F = female)

Q: Do you support the Koizumi cabinet?

T P M F
Yes 41 (50) 44 39
No 38 (36) 41 35
Not interested 20 (13) 15 24

Q: (Only for those who answered "yes" to the above question) Why?

T P M F
Because the prime minister is from the Liberal Democratic Party
9 (8) 8 10
Because something can be expected of Prime Minister Koizumi's
leadership
27 (24) 26 28
Because new policy measures can be expected
9 (17) 7 10
Because the nature of politics is likely to change
53 (47) 56 50

Q: (Only for those who answered "no" to the above question) Why?

T P M F
Because the prime minister is from the Liberal Democratic Party
8 (8) 10 7
Because the prime minister compromises too much with the ruling
parties
16 (22) 18 13
Because I can't feel there is an economic recovery
57 (49) 47 65
Because the prime minister is reluctant to take action against
political scandals
14 (15) 18 10

Q: Which political party do you support?

T P M F
Liberal Democratic Party (LDP)
28 (31) 29 28
Democratic Party of Japan (DPJ or Minshuto)
21 (20) 24 19
New Komeito (NK)
5 (6) 3 6
Japanese Communist Party (JCP)
3 (2) 2 3
Social Democratic Party (SDP or Shaminto)
1 (2) 1 2
People's New Party (PNP or Kokumin Shinto)
0 (0) 1 0
New Party Nippon (NPN or Shinto Nippon)
-- (0) -- --
Other parties
2 (1) 2 2

TOKYO 00003388 006 OF 010


None
38 (35) 38 38

Q: Prime Minister Koizumi will not run in the LDP's presidential
election set for this September and will step down. Who do you
think is appropriate in the LDP for the next prime minister?

T P M F
Taro Aso 4 (3) 6 3
Shinzo Abe 42 (38) 38 44
Taro Kono 2 (2) 2 1
Sadakazu Tanigaki 2 (3) 2 2
Yasuo Fukuda 19 (20) 25 15
Taku Yamasaki 1 (1) 1 0
Not on the list 26 (27) 24 27

Q: What would you like the next prime minister to pursue first?

T P M F
Fiscal reconstruction
16 (19) 17 15
Economic expansion
23 (29) 21 24
Cope with low birthrates
25 (23) 18 31
Improve Japan's ties with China, South Korea
9 (14) 14 6
Fix social divide
17 (--) 19 15
Not on the list
7 (8) 10 5

(Note) Figures shown inpercentage, rounded off. "0" indicates
that the figure was below 0.5%. "No answer" omitted. Parentheses
denote the results of the last survey conducted May 13-14.

Polling methodology: The survey was conducted June 17-18 over the
telephone with the aim of calling a total of 1,000 voters across
the nation on a computer-aided random digit sampling (RDS) basis.
Answers were obtained from 1,026 persons.

(4) Poll: 49% urge BOJ gov. to quit over his investment

TOKYO SHIMBUN (Page
UNCLAS SECTION 01 OF 10 TOKYO 003388

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: JAPANESE MORNING PRESS HIGHLIGHTS 06/19/06


Index:

(1) Abe a step ahead of others in LDP presidential race;
Political maneuvering intensifying over 704 votes; "Yasukuni,"
"generational change" likely to be campaign issues

(2) Potential successor to Prime Minister Koizumi: What are the
campaign issues? Part one, fiscal reconstruction; Which should be
given priority, tax increase or spending cuts?

(3) Poll on Koizumi cabinet, political parties, post-Koizumi race

(4) Poll: 49% urge BOJ gov. to quit over his investment

(5) Interview with Heizo Takenaka on achievements of Koizumi
administration over five years (Part 2): There is no serious
poverty in Japan creating social disparity

(6) Editorial: We appreciate Yokosuka's decision to accept
nuclear-powered warship deployment

(7) Editorial: Japan should take initiative in scientific
argument at IWC plenary session

ARTICLES:

(1) Abe a step ahead of others in LDP presidential race;
Political maneuvering intensifying over 704 votes; "Yasukuni,"
"generational change" likely to be campaign issues

NIHON KEIZAI (Page 3) (Abridged)
June 17, 2006

Now that the current Diet session is effectively over, potential
successors to Liberal Democratic Party President Junichiro
Koizumi will dash ahead toward the presidential goal. Although
Chief Cabinet Secretary Shinzo Abe, 51, appears to be taking the
lead in the race at present, senior LDP lawmakers critical of Abe
are expected to rally around former Chief Cabinet Secretary Yasuo
Fukuda, 69, to turn the tables. The new LDP president will be
determined by a total of 704 votes, the LDP lawmakers and local
rank-and-file members combined. Fierce campaigns have effectively

been kicked off in order to capture as many votes as possible.

404 Diet members' votes

Abe, who has been steadily gaining support in the party, told a
press conference yesterday: "There are so many things to be taken
care of, and I must devote myself to my duties for the time
being." Abe intends to announce his candidacy after the St.
Petersburg Summit in mid-July.

Abe loyalists, mostly mid-level and junior LDP lawmakers, have
launched a parliamentary league to support a second chance, a de
facto support group for Abe. A total of 94 LDP lawmakers showed
up at its inaugural meeting, exhibiting cross-factional support
for Abe.

Meanwhile, Abe's prospective rival, Fukuda, brushed aside growing
speculation of his candidacy after a Lower House plenary session
yesterday.


TOKYO 00003388 002 OF 010


In contrast to junior members who are eager to throw support
behind Abe, senior members have high hopes for Fukuda in the hope
of blocking a generational change. Both Fukuda and those senior
members are critical of Abe, who is supportive of visits to
Yasukuni Shrine by Prime Minister Koizumi. Such influential party
members as Koichi Kato and Taku Yamasaki, who are not supportive
of Abe in consideration of relations with China and South Korea,
are closely watching whether the shrine visits would become a
campaign issue.

Yamasaki and others are considering joining hands with veteran
members of the Tsushima, Ibuki, and Niwa-Koga factions who do not
have any specific individuals to support. Clamping down on Abe-
tilted junior members in those factions is also a challenge for
them.

Recent opinion polls also showed low support rates for Finance
Minister Sadakazu Tanigaki, 61, and Finance Minister Taro Aso,
65, alluding to their slow starts. Even so, Aso at a Kono faction
meeting last night expressed his eagerness to run for the LDP
presidency, describing it as his dream for the past five years.
Tanigaki, on the other hand, only indicated that he would work
hard to fulfill his duties.

Whether or not Fukuda will join the race is a matter of great
concern to many. Veteran lawmakers fear that in the event Fukuda
decides not to run in the race, they will run out of time to find
a powerful candidate in place of Fukuda.

In a meeting yesterday of LDP Lower House members, Koizumi
predicted fierce factional maneuvering, saying, "Although the
Diet session is ending, a fierce power struggle is expected to
occur in the LDP."

300 local votes: Rural areas call for special consideration,
while urban areas expect continued reform programs

The future of 300 votes to be assigned to prefectural chapters is
also a focal point. Some 1 million rank-and-file and fraternity
members, who paid membership dues for two years until the end of
last year, are eligible to cast votes. The recent trend is
characterized by a growingpercentage of "floating votes" that are
not bound by wishes of factions or support groups, as evidenced
by Koizumi's collection of 68.3% of the votes in the 2003
presidential poll.

The Nihon Keizai Shimbun conducted a telephone-based survey on
June 15-16 of secretaries general, chiefs of the secretariat, and
other executives of prefectural chapters to probe their outlooks
on the presidential race and campaign issues. Prefectural
secretaries general know local situations inside out and have

SIPDIS
strong voices toward rank-and-file members, as they in many cases
served as prefectural assembly members.

Backing the right horse

In the survey, six persons - the greatest number - pointed to Abe
as the lawmaker most suitable to become the next prime minister.
His support ranged in region from Hokkaido to Gifu to Osaka, in
addition to his home turf of Yamaguchi. Aso followed Abe with
five people (Fukuoka, Nagano, and other prefectures),and Fukuda
with three (Gunma, Shimane, and another place).

TOKYO 00003388 003 OF 010



Nearly 70% said "undecided" or "cannot answer." Many also
expressed their willingness to back Abe once he announces his
candidacy officially. A secretary general in the TOKAI region
predicted that industrial organizations would back the right
horse to maintain communication channels with a new
administration so as not to be labeled as a orce of resistance.

Prefectural chapters are expecting the next president to serve as
the party's attractive standard bearer for the Upper House
election next summer. "Mr. Abe has the edge in terms of
popularity," a Tohoku region secretary general noted.

Local areas unhappy with structural reform

The survey exposed a clear difference in awareness of campaign
issues between urban and local areas. For instance, 21 party
members in Tohoku, Kyushu, and other rural areas cited the
correction of the social disparity as a major issue. In contrast,
many in urban areas, such as Kanagawa and Osaka, underline the
need for fiscal reconstruction, pension reform, and continued
reform programs.

Discontent is deeply seated in the LDP's local chapters that the
Koizumi administration has pursued structural reform at the cost
of local areas. Abe in the press conference yesterday played up
his determination to pursue policies to encourage working-class
people in rural areas. Aso also underlined the need to pay more
attention to local districts. Post-Koizumi contenders have begun
making comments with the issue of social disparity in mind.

(2) Potential successor to Prime Minister Koizumi: What are the
campaign issues? Part one, fiscal reconstruction; Which should be
given priority, tax increase or spending cuts?

NIHON KEIZAI (Page 2) (Excerpts)
June 18, 2006

Party takes initiative

Finance Minister Sadakazu Tanigaki on June 14 visited the Liberal
Democratic Party (LDP) Headquarters office of Policy Research
Council Chairman Hidenao Nakagawa, who is leading the work of
drafting a spending cut plan to be incorporated in basic policy
guidelines on economic and fiscal management and structural
reforms to be issued in July. He told Nakagawa, "I will firmly
cooperate with you." Budget bureau officials responsible for
drafting a budget for each government agency are also visiting
the Policy Research Council chairman's office. Some are even
saying, "It appears that the Finance Ministry's Budget Bureau has
moved to LDP Headquarters."

Tanigaki and State Minister for Economic and Fiscal Policy Hajime
Yosano, who is in charge of the Council on Economic and Fiscal
Policy, have shown a desire to make the tax hike argument into a
concrete deal by advocating unified reform of expenditures and
revenues.

However, Prime Minister Junichiro Koizumi in late March ordered
the drafting of a concrete plan by the LDP. Following this order,
Nakagawa has seized the initiative, taking the position that
national burden should be constrained to the minimum level

TOKYO 00003388 004 OF 010


through "thorough spending cuts." He is close to Chief Cabinet
Secretary Shinzo Abe. This has contributed to the spread of the

SIPDIS
observation that the prime minister has Abe in mind as a
candidate for his successor.

Having trouble in increasing approval ratings in opinion polls,
Tanigaki found it necessary to go halfway to talk to Nakagawa.

Yosano during a press conference on June 16 clarified his stance
of cooperating with the LDP, noting, "It is better for the
government to refrain from actively making statements at the
present stage."

Yosano, who is regarded as the fifth potential candidate
following Foreign Minister Taro Aso, Finance Minister Sadakazu
Tanigaki, former Chief Cabinet Minister Yasuo Fukuda and Chief
Cabinet Secretary Shinzo Abe, recently has been holding meetings
with mid-ranking and junior LDP members. He is also approaching
Nakagawa, with whom he has had run ins in the past over various
actions and policies. Some members of the Ibuki faction, which is
affiliated with the Nakasone faction, to which Yosano, now a non-
affiliated member, once belonged, see that his move is out of
consideration to the presidential race.

Nikai acts as go-between

In order to avoid the tax hike argument, Nakagawa wanted to
estimate an increase in tax revenues at a higher level by setting
economic growth at a slightly high level. Yosano was against this
policy. There appeared to be no way out in their economic growth
argument. The moves of Minister of Economy, Trade and Industry
(METI) Toshihiro Nikai have become entangled in this situation.

METI has then drafted an economic growth strategy targeting a
real growth rate of 2.25 a year and calculated a gap between
revenues and spending, based on a high economic growth rate that
can be attained. In the meantime, the government and the ruing
camp are aiming at a high growth rate under a growth strategy
outline. This approach has saved the faces of both Nakagawa and
Yosano.

Last year's Lower House election took place when Nikai was
serving as the chairman of the LDP Executive Council, which is
responsible for election campaigning. He approached Abe, who was
then acting chief cabinet secretary. Calling for improving
relations with China, he has much in common with Fukuda, Abe's
rival.

Because of this position, Nikai was able to act as a go-between
to reconcile Yosano and Nakagawa. Yosano is expected to receive
support from anti-Abe lawmakers in the event Fukuda does not
declare his candidacy for the presidential race. In that sense,
it is significant for Yosano to cooperate with Nakagawa, a member
of the Abe camp.

The prime minister, who has rejected the idea of raising the
consumption tax during his tenure, reiterated his stance of
giving priority to cutting expenditures at a meeting of the
National Council of Secretaries General of the LDP Local Chapters
held on June 14, "General-account spending also should be cut if
you want to avoid a tax hike, despite a substantial rise in tax
revenues."

TOKYO 00003388 005 OF 010



(3) Poll on Koizumi cabinet, political parties, post-Koizumi race

MAINICHI (Page 2) (Full)
June 19, 2006

Questions & Answers
(T = total; P = previous; M = male; F = female)

Q: Do you support the Koizumi cabinet?

T P M F
Yes 41 (50) 44 39
No 38 (36) 41 35
Not interested 20 (13) 15 24

Q: (Only for those who answered "yes" to the above question) Why?

T P M F
Because the prime minister is from the Liberal Democratic Party
9 (8) 8 10
Because something can be expected of Prime Minister Koizumi's
leadership
27 (24) 26 28
Because new policy measures can be expected
9 (17) 7 10
Because the nature of politics is likely to change
53 (47) 56 50

Q: (Only for those who answered "no" to the above question) Why?

T P M F
Because the prime minister is from the Liberal Democratic Party
8 (8) 10 7
Because the prime minister compromises too much with the ruling
parties
16 (22) 18 13
Because I can't feel there is an economic recovery
57 (49) 47 65
Because the prime minister is reluctant to take action against
political scandals
14 (15) 18 10

Q: Which political party do you support?

T P M F
Liberal Democratic Party (LDP)
28 (31) 29 28
Democratic Party of Japan (DPJ or Minshuto)
21 (20) 24 19
New Komeito (NK)
5 (6) 3 6
Japanese Communist Party (JCP)
3 (2) 2 3
Social Democratic Party (SDP or Shaminto)
1 (2) 1 2
People's New Party (PNP or Kokumin Shinto)
0 (0) 1 0
New Party Nippon (NPN or Shinto Nippon)
-- (0) -- --
Other parties
2 (1) 2 2

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None
38 (35) 38 38

Q: Prime Minister Koizumi will not run in the LDP's presidential
election set for this September and will step down. Who do you
think is appropriate in the LDP for the next prime minister?

T P M F
Taro Aso 4 (3) 6 3
Shinzo Abe 42 (38) 38 44
Taro Kono 2 (2) 2 1
Sadakazu Tanigaki 2 (3) 2 2
Yasuo Fukuda 19 (20) 25 15
Taku Yamasaki 1 (1) 1 0
Not on the list 26 (27) 24 27

Q: What would you like the next prime minister to pursue first?

T P M F
Fiscal reconstruction
16 (19) 17 15
Economic expansion
23 (29) 21 24
Cope with low birthrates
25 (23) 18 31
Improve Japan's ties with China, South Korea
9 (14) 14 6
Fix social divide
17 (--) 19 15
Not on the list
7 (8) 10 5

(Note) Figures shown inpercentage, rounded off. "0" indicates
that the figure was below 0.5%. "No answer" omitted. Parentheses
denote the results of the last survey conducted May 13-14.

Polling methodology: The survey was conducted June 17-18 over the
telephone with the aim of calling a total of 1,000 voters across
the nation on a computer-aided random digit sampling (RDS) basis.
Answers were obtained from 1,026 persons.

(4) Poll: 49% urge BOJ gov. to quit over his investment

TOKYO SHIMBUN (Page 1) (Full)
June 19, 2006

Kyodo News conducted a telephone-based nationwide public opinion
survey on June 17-18, in which 49.2% of respondents answered that
it would be better for Bank of Japan Governor Toshihiko Fukui to
resign over his investment of 10 million yen in the Murakami
Fund.

Fukui continued investing in the fund even after becoming BOJ
governor. In the survey, respondents were asked if they thought
it was problematical. In response to this question, 62.4% of the
public answered "yes," with only 10.7% saying "no." The figures
show that many people questioned his investment in the fund.
Those who "can't say which" accounted for 24.9%. Fukui has said
he would report his investment gains to the Diet by tomorrow.
However, he will be required to account even more clearly for his
behavior and future response.


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In the survey, 13.0% answered that Fukui does not have to resign.
However, 35.9% said they could not tell whether he should resign
or not. As seen from such results, the survey indicated that
there were also cautious opinions about whether to call for his
resignation.

(5) Interview with Heizo Takenaka on achievements of Koizumi
administration over five years (Part 2): There is no serious
poverty in Japan creating social disparity

ASAHI (Page 15) (Full)
June 6, 2006

Hoshi: When the bureaucrats criticize you, they cite the issue of
widening income disparity. What do you say to their argument?

Takenaka: In an age of advancing globalization and new businesses
like IT expanding, winners and losers are generated, and income
disparity eventually grows. Despite this fact, some critics
attribute the widening gap to the Koizumi reform drive. In most
industrialized countries, the wealth gap has widened since the
1980s, and it is not correct to say that something special is
occurring only in Japan.

If the non-performing bank loans had been left unattended, the
number of jobless persons would probably have surged from the
current 2 million or so to 4 or 5 million. If this number of
people earned no income, the nation's income disparity would have
risen further. The more the economy improves, the more the social
divide will be narrowed. The Koizumi administration indisputably
made efforts to that end."

Yamada: Various incidents have taken place recently. Looking into
their details, various problems can be detected behind them.

Takenaka: Rather than income disparity, what should be discussed
is the question of poverty. If poverty spreads to a certain
extent, the government will have to work out countermeasures. In
this country, however, I do not think there is a level of poverty
that must be tackled at a social policy level.

Yamada: It might be a logical conclusion that scrapping the
traditional convoy system only expanded the income gap.

Takenaka: That might be true, but it is also true that the convoy
system resulted in growing income disparity, for example, by
raising the income of bankers.

Yamada: Local economies, though, are worn out.

Takenaka: Some complain of decreasing local allocation of tax
transfers, but one of the main reasons for the allocation cuts is
that local tax revenues have been on the increase. According to
local governments' fiscal plans for FY2006, local expenditures
have decreased only 0.7% from the year before. Spending on public
works in local districts has certainly been reduced in relative
terms, but before that, public works spending was on the rise in
the regions. The situation is returning to what it used to be.

In order to revitalize local economies, there will be no other
means but for the government to resort to orthodox policy
measures, like special deregulation zones or local

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rehabilitation. Some local governments have brought about
positive results by such means.

Hoshi: Some criticize your policy stance as "being at the US'
beck and call." Does Japan have to choose between either living
in Asia or acting as a mediator between the US and Asia?

Takenaka: Japan should play both roles. The degree of Japanese
manufacturers' integration in Asia is significantly high. This
trend, including the workforce turnover, is likely to continue
into the future. It is also important for Japan to keep close
ties with the US. Even so, the integration of Asia is quite
different from that of Europe in nature.

Japan and the US are now enjoying good relations, but such a
favorable state owes much to the personnel ties between Mr.
Koizumi and President Bush. It might be necessary for the country
as a whole to make more efforts.

Hoshi: What do you think about the problem of ethics in the
market that came into focus in the wake of the Livedoor scam and
the Murakami Fund scandal?

Takenaka: I think that Japanese society was somewhat lenient
(about such wrongdoings). Those involved in the scandals were
overly optimistic. They still believed that some infractions
would be tolerated in a village society (mura shakai).

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

(To be continued)

(6) Editorial: We appreciate Yokosuka's decision to accept
nuclear-powered warship deployment

SANKEI (Page 2) (Full)
June 19, 2006

Yokosuka Mayor Ryoichi Kabaya expressed his intention to accept
the planned deployment of the USS George Washington, a nuclear-
powered aircraft carrier, at the naval base in the city.

The US nuclear-powered aircraft carrier will be deployed at
Yokosuka Port as the replacement of the USS Kitty Hawk, which
will end its service in two years. Yokosuka Port will become the
first Japanese port of a US nuclear-powered aircraft carrier.

Mayor Kabaya stated: "In consideration of the security of Japan
and the Far East, the presence of a nuclear-powered aircraft is
important. We have no choice but to accept the deployment of a
nuclear carrier." His statement should be highly appreciated.

Moves by North Korea, which is preparing the test-launch of a
long-range ballistic missile, and by China, which does not deny
the possible use of arms against Taiwan, have become worrisome
issues for Japan.

In an attempt to prevent such moves, the presence of the US
aircraft carrier assumes the role of maintaining peace and
stability in the Asia-Pacific region. It is significant that the
city of Yokosuka understands that the effectiveness of deterrence

TOKYO 00003388 009 OF 010


in collaboration of the US military and Japan's Self-Defense
Forces (SDF) secures Japan's security.

The governments of Japan the United States reached an agreement
last October on the nuclear-powered aircraft carrier deployment.
The USS Kitty Hawk, the oldest aircraft carrier, came into
commission in 1961. The Japanese government accepted the US
Navy's plan to replace all its aircraft carriers to nuclear-
powered aircraft ones.

However, Mayor Kabaya continued to ask for a conventional
carrier. The city assembly also had passed unanimously a
resolution calling for withdrawal of the plan to deploy a nuclear-
powered aircraft carrier.

The mayor finally accepted the planned deployment of the USS
George Washington because Foreign Minister Taro Aso had said that
there was no possibility of the US deploying a conventional
aircraft carrier, and at the same time revealed talks would start
with the US on a mutual assistance pact in case of nuclear
disaster, which the city had demanded.

The mayor himself stated at a press conference, "We made a tough
choice." The Japanese and US governments, therefore, should do
their utmost so that Yokosuka residents will be able to accept
the deployment.

Regarding the safety of nuclear-powered aircraft carriers, the
Japanese and US governments have found no detection of leakage of
radioactivity in their monitoring of more than 1,200 aircraft
carriers making port calls in Japan since the 1960s. Yet, in
order to eliminate the anxiety of residents, the two governments
need to strive for perfection in the arrangements.

According to the outcome of a survey conducted by the Cabinet
Office in April, 76% of the public -- the highest ever -- support
the Japan-US security arrangements. We should not forget that the
Japanese public desires Japan-US security cooperation to be
promoted.

(7) Editorial: Japan should take initiative in scientific
argument at IWC plenary session

SANKEI (Page 2) (Full)
June 16, 2006

The International Whaling Commission (IWC) will hold its annual
plenary session on St. Christopher Nevis on the Caribbean Sea.
Amid the rumor that the IWC has stopped functioning due to the
confrontation between whaling countries and anti-whaling
countries, we would like to see cool-headed debate, based on
scientific data.

Though Japan, which is calling for the resumption of commercial
whaling, has been forced to take the offensive, the number of pro-
whaling countries will likely exceed that of anti-whaling
countries at the upcoming plenary session.

This could be the outcome of Japan's efforts bearing fruit, but
in order to have critical choices adopted at the IWC, it is
necessary to gain approval from three-quarters of the member
nations. For this reason, the introduction of a revised

TOKYO 00003388 010 OF 010


management system (RMS) that stipulates a catch-quota system,
based on the resumption of commercial whaling, and a monitoring
system, as proposed by Japan and other countries will likely be
put on the back burner. Tangible progress cannot be hoped for.

However, the increase in the number of pro-whaling countries has
brought about the possibility of IWC discussions emerging from
fruitless past arguments featured by simple exchanges of
recriminations. This can be a good opportunity to break with the
present rigid situation in the IWC.

Taking advantage of this situation, Japan plans to declare its
intention to form a group of pro-whaling countries. Pro-whaling
countries will discuss a sustainable method of utilizing whale
resources from a scientific standpoint in this setting. Anti-
whaling countries may oppose the move, but we would like to see
pro-whaling countries group hold meetings in a way that can
convince the international community, characterizing such a venue
as a starting point for the normalization of the IWC.

The determination of populations of whales will likely become a
hot issue at the plenary session. In particular, an estimate for
the number of black minke whales will likely be revised downward
from the present 760,000 to about 300,000.

The figure 300,000 has been worked out, based on calculations
through observation. It is said that the number varies, depending
on the oceanic areas that are surveyed, and the ice-formation
situation.

As a matter of fact, Japan's research whaling has proved that the
number of whales has increased since the total ban on commercial
whaling. There is even a view that the increase in the number of
fishes eaten by whales, which are on top of the oceanic
ecosystem, is directly linked to the decrease in the number of
sardines, sauries and squids.

For this reason, Japan should offer counterarguments to the new
estimate for populations of whales, based on a scientific
standpoint.

When it is said that there would be food shortages in the near
future, it would not be possible to avoid the issue of whaling,
which plays a big role in terms of being a food resource. We want
Japan to take the initiative in discussions on the whaling issue,
based on a scientific standpoint, for that purpose as well.

SCHIEFFER