JAPANESE MORNING PRESS HIGHLIGHTS 06/20/06

UNCLAS SECTION 01 OF 11 TOKYO 003407

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SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 06/20/06


Index:

1) Top headlines
2) Editorials
3) Prime Minister's daily schedule

North Korea missile issue:
4) Prime Minister Koizumi: If North Korea launches Taepodong
missile, it will meet a severe response from Japan
5) Ambassador Schieffer: If North Korea launches missile, US
will take issue to UN Security Council
6) Government on alert that North Korea missile launch may come
on 42nd anniversary of Kim Jong Il's political career
7) US-Japan missile defense cooperation may be sped up by new
North Korea missile threat

8) Government to issue order today pulling out GSDF from Iraq
by next month

9) President Bush, Prime Minister Koizumi to discuss North
Korea, Iran nuclear issue at their summit meeting

10) Text of Prime Minister Koizumi's news conference yesterday

Yasukuni Shrine issue:
11) Poll shows 37% of public against prime minister's visits to
Yasukuni Shrine, with only 17% approving
12) LDP's Taku Yamasaki: If prime minister visits Yasukuni
August 15, would have an impact on the LDP presidential election

Political agenda:
13) Prime Minister preparing way for Shinzo Abe as his successor
14) Popularity gap widens between Abe, Yasuo Fukuda 44% vs. 19%
in Yomiuri poll
15) Kyodo poll shows Abe's popularity rose from 40.1% to 45.6%
in a month, and Fukuda's dropped from 31.4% to 24.3%

16) Japan scores victory at IWC meeting with members supporting
it by one vote margin on commercial whaling

17) Chugai Pharmaceuticals mistakenly used banned US beef blood
in two of its medical products

18) Keidanren report card on regulatory reform shows drop in
achievements in fiscal 2005 to 47%

Articles:

1) TOP HEADLINES

Asahi, Mainichi, Yomiuri, and Tokyo Shimbun:
Koizumi to announce GSDF pullout from Iraq today along with
British and Australian troops aimed at completing withdrawal in
August

Nihon Keizai:
New syndicate loans topped 25 trillion yen last year on growing
demand for buyouts and revivals

Sankei:
Murakami admits insider trading involving Livedoor


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2) EDITORIALS

Asahi:
(1) LDP presidential race: Fukuda must make up his mind
(2) Seiko Hashimoto as new Japan Skating Federation President

Mainichi:
(1) North Korea must immediately stop preparations for firing a
Taepodong-2
(2) Japan happy with IWC's pro-whaling vote

Yomiuri:
(1) Cultural Affairs Agency must rebuild itself
(2) Growing local brands must win consumer confidence

Nihon Keizai:
(1) Japan must persistently search for ways for continued use of
whaling
(2) Future of Shanghai Cooperation Organization raises concern

Sankei:
(1) Taepodong-2 and defense of Japan
(2) Medical reform requires greater national awareness

Tokyo Shimbun:
(1) Elevator accidents: Safety is top priority
(2) Japan Skating Federation President Seiko Hashimoto must
pursue reform for skaters

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, June 19

NIHON KEIZAI (Page 2) (Full)
June 20, 2006

10:00
Handed written official appointment to BOJ Policymaking Board
member Tadao Noda. Met afterwards Minister in Charge of Declining
Birthrate Inoguchi.

11:00
Met with High-tech Industry Institute Chairman Junichi Nishizawa,
followed by Deputy Foreign Minister Nishida.

13:31
Met with Chief Cabinet Secretary Abe, LDP Secretary General
Takebe, and Diet Affairs Committee Chairman Hosoda in Diet
building. Visited various factions in the Lower House to thank
them at the end of the regular Diet session.

14:00
Arrived at Kantei.

15:00
Held press conference. Met with Nishida and North American
Affairs Bureau chief Kawai.

16:14
Met with Land, Infrastructure, and Transport Minister Kitagawa.

17:00

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Met with Assistant Deputy Chief Cabinet Secretary Saka and
Cabinet Office Director General Hayashi. Met later with Internal
Affairs and Communications Minister Takenaka.

18:15
Returned to his official residence.

4) Prime Minister: Calls for self-restraint but warns of stern
action if North Korea launches Taepodong-2 missile

SANKEI (Page 1) (Excerpts)
June 20, 2006

Prime Minister Junichiro Koizumi indicated that Japan would take
such severe actions as economic sanctions, if North Korea
launches a long-range Taepodong-2 missile, saying: "If a missile
is launched, Japan will consult with the United States and other
major powers and take stern action."

Speaking at the press conference held at the Prime Minister's
Official Residence yesterday afternoon to mark the adjournment of
the Diet session, the prime minister urged Pyongyang to exert
self-restraint, saying: "Japan, in close cooperation with the US
and South Korea, has been calling on North Korea to refrain from
launching a missile in a rational, restrained manner." Koizumi,
though, declined to comment on what specific measures Japan is
planning to take if Pyongyang test-fires a ballistic missile.

5) US ambassador to Japan: If a missile fired, the US will refer
the matter to UNSC

YOMIURI (Page 2) (Full)
June 20, 2006

US Ambassador to Japan Thomas Schieffer yesterday met with
Japanese reporters, and when asked about America's response if
North Korea were to test-fire a Taepodong-2 long range ballistic
missile, he indicated that the US government would seek to
convene the United Nations Security Council (UNSC) and refer the
matter to the UNSC. He also emphasized that the US would consider
additional economic sanctions against North Korea, noting: "We
are discussing appropriate steps with our allies, including
Japan, but I think we must consider sanctions."

Speaking of the possibility of holding a meeting between the
United States and North Korea to discuss the missile issue,
Schieffer indicated that the first thing for that country to do
is to return to the six party talks, saying: "If it returned to
the six-party talks, North Korea would be able to discuss a
variety of issues with the US."

6) Government vigilant against North Korea's moves, especially on
an anniversary

YOMIURI (Page 3) (Full)
June 20, 2006

Tatsuya Fukumoto

"Today is said to be the 42nd anniversary of the beginning of
North Korean leader Kim Jong Il's political activities, and when
that country launched a missile in 1998, one of the anniversaries

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was nearing," a high-level Japanese government official said at a
press conference yesterday morning.

Pyongyang launched a Taepodong-1 missile on Aug. 31, 1998, nine
days before the 50th anniversary of the national foundation. At
the time, the Japanese government remained on alert against a
second launch even after the first one. Referring to North
Korea's moves this time, some in the government had speculated
that if it were to launch a missile, the most likely date would
be June 19.

The Defense Agency (JDA) stays alert and continues monitoring the
situation by mobilizing Maritime Self-Defense Force's (MSDF)
Aegis ships and the EP-3 information-gathering aircraft for
electronic warfare, and also by using the Air Self-Defense
Force's (ASDF) FPS-XX ground-based radar and other means. The US
Forces Japan (USFJ),as well, continued monitoring via its
RC0135S Cobra Ball.

The Japanese government is considering restricting remittances
and trade under the Foreign Exchange Law as well as port entries
under the Law for Banning Certain Vessels' Port Entries in
working together with the United States. The Foreign Exchange Law
has provisions on economic sanctions, under which Japan can
regulate remittances to and trade with North Korea. In order to
invoke this law and the Law for Banning Certain Vessels' Port
Entries, which prohibits ships that stopped at North Korean ports
from entering Japanese ports, the government needs to obtain
approval at a cabinet meeting. A Japanese government official
explained: "Japan has already started discussions on such matters
as the priority order of sanctions and the duration."

7) Japan, US may expedite missile defense cooperation

SANKEI (Page 3) (Abridged)
June 20, 2006

Japan and the United States are facilitating bilateral missile
defense cooperation against the backdrop of North Korea's
preparations to fire a Taepodong long-range ballistic missile,
sources said yesterday. US Forces Japan (USFJ) will deploy
Patriot Advanced Capability-3 (PAC-3) surface-to-air missiles in
Japan within the year to intercept ballistic missiles, and the
two countries will go ahead with role sharing as well as
intelligence sharing.

The Japanese and US governments held a consultative meeting of
officials for foreign and defense affairs in Hawaii on June 15
over USFJ realignment. In the meeting, the two governments looked
into the possibility of setting up a team to prioritize and
implement specific plans described in their final report released
in May on USFJ realignment.

In the meantime, North Korea was almost ready to launch a missile
after having set it on a launch pad at a missile test site. So
the Japanese and US governments exchanged views there about North
Korea's readiness to launch a Taepodong-2 missile, according to
sources. Japanese and US officials there reaffirmed that North
Korea was threatening to launch a ballistic missile. Based on
that view, they also agreed to expedite missile defense
cooperation between Japan and the United States in the process of
realigning US forces in Japan.

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In concrete terms, USFJ will deploy PAC-3 missiles within the
year, while the final report did not specify when to deploy them.
The Air Self-Defense Force is also going to deploy PAC-3 missiles
by next March, and the US military's deployment of PAC-3
intercept missiles will start before that.

8) Iraq: Withdrawal order expected today for GSDF

YOMIURI (Top play) (Abridged)
June 20, 2006

The government will decide today to withdraw Ground Self-Defense
Force troops currently deployed in the southern Iraqi city of
Samawah. That is because Britain will transfer its security
powers in July to the Iraqi government in the province of Al
Muthanna, which includes Samawah. Defense Agency Director General
Nukaga will order the GSDF today to withdraw the Samawah-based
troops. In response, the GSDF troops will begin to pull out of
Iraq. They will move to Kuwait in late July and will return home.

Prime Minister Koizumi and New Komeito President Kanzaki will
meet this morning, and the ruling parties will hold a liaison
conference to approve the government's decision to recall the
GSDF troops. The government will then hold a Security Council
meeting to make a formal decision on the GSDF's withdrawal.
Koizumi is expected to meet the press today.

"When the time has come, I will make an appropriate judgment and
want the GSDF members return home safely with understanding
obtained from the United States, Britain, Australia, and the
Iraqi government," Koizumi told a press conference yesterday. He
added, "I will consider what Japan can do as a responsible member
of the international community to help stabilize Iraq, and I'd
like to continue to do so (even after the GSDF's pullout)." With
this, the premier underscored his intention to continue engaging
the Air Self-Defense Force in airlift missions between Kuwait and
Iraq. The government will extend ASDF airlifts to Baghdad and
other locations in response to a request from the United Nations.

9) North Korea, Iran's nuclear issue likely to be on agenda of
upcoming Japan-US summit; Both leaders to reaffirm close
cooperation

YOMIURI (Page 2) (Full)
June 20, 2006

The major agenda items for the upcoming Japan-US summit meeting
between Prime Minister Koizumi and President Bush in Washington
on June 29 were set yesterday. During their talks, the two
leaders will reaffirm their closer cooperation to resolve the
North Korea nuclear and missile development and abduction issues.
In addition, they will exchange views on Iran's nuclear program,
reconstruction assistance to Iraq, and the East Asian situation,
centering on China's economic and military rise. A joint
statement reaffirming the significance of the Japan-US alliance
in a global context is will be released after the summit.

In the meeting, both leaders will confirm the need to urge North
Korea, which has shown signs of preparing to test-fire a
Taepodong-2 missile, to end this provocative act and quickly
return to the six-party talks.

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On the Iranian nuclear issue, the two leaders will urge Iran to
accept a comprehensive proposal offered by the permanent members
of the United Nations Security Council (UNSC) plus Germany. On
Iraq, the prime minister will declare his determination to
continue reconstruction assistance even after the pullout of
Ground Self-Defense Force (GSDF) troops from Iraq.

10) Main points in prime minister's remarks in press conference

YOMIURI (Page 4) (Full)
June 20, 2006

The following is a gist of remarks made by Prime Minister Koizumi
in a press conference yesterday.

(Tasks that lie ahead)
In drawing up budgetary request guidelines for next fiscal year's
budget, emphasis should be placed on both economic revitalization
and fiscal reconstruction, and this task is extremely important.
Next week, I will be leaving for the United States and Canada.
St. Petersburg Summit is scheduled for July. In September, the
Liberal Democratic Party's presidential election will be held.
Many problems lie ahead, and I have a lot of things to do.

(LDP presidential election)
The next premier must push ahead with both revitalizing the
economy and reconstructing the nation's financial system. My
successor should demonstrate leadership without fearing
criticism, but it is also necessary to leave some duties to
trustworthy party (LDP) members. Great breadth as a human and
passion to doggedly resolve problems are required of my
successor.

In the LDP presidential election, since the prime minister will
be elected, there might be scenes in which candidates engage in a
power struggle. There might be cases in which relations become
strained. When all candidates who obtain support from more than
20 LDP members declare their candidacy, I will have to clarify
for whom I will vote. Until then, I will make no comment.

(North Korea's missile issue)
Japan, in cooperation with the US and South Korea, has been
calling on North Korea to refrain from launching a missile in a
rational, restrained manner. I am still hoping North Korea won't
launch one. But if Pyongyang test-fires a missile, Japan will
have to consult with the US government and others and take stern
actions. I had better not comment for now on what response Japan
will take.

(Plan for GSDF withdrawal from Iraq)
When the right time comes, Japan will make a proper decision and
pull Ground Self-Defense Force (GSDF) troops out of Iraq upon
obtaining approval from various countries concerned (the US,
Britain and Australia) and the Iraqi government.

Japan, as a responsible member of the international community,
will continuously think what it can do for the stability of Iraq
and provide assistance (even after the troops are withdrawn).

11) Poll: 37% against Yasukuni visit; 17% for upgrading Defense
Agency to ministry, 21% against

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NIOHN KEIZAI (Page 2) (Full)
June 20, 2006

In the latest poll, 37% of respondents answered "no" when asked
if they thought Prime Minister Junichiro Koizumi should pay
homage at Yasukuni Shrine this year, with 32% saying he should
visit the shrine but not on Aug. 15, the day World War II ended,
and 17% insisting that he should visit the shrine on Aug. 15.

Respondents were also asked if they would support a government-
introduced bill to upgrade the Defense Agency to the status of a
ministry. In response to this question, 17% answered "yes," with
21% saying "no." Those who "can't say which" accounted for 51%.

12) LDP's Yamasaki: If Prime Minister Koizumi visits Yasukuni
Shrine on Aug. 15 will affect the LDP presidential race

MAINICHI (Page 5) (Full)
June 20, 2006

Taku Yamasaki, a former vice president of the Liberal Democratic
Party (LDP),delivered a speech at a forum sponsored by the
Mainichi Shimbun held yesterday in Fukuoka City. Referring to the
upcoming LDP presidential election, he indicated his view that
should Prime Minister Junichiro Koizumi visit Yasukuni Shrine, it
would affect the results of the LDP presidential race. He stated:
"This year, Aug. 15 is particularly significant. After that, I
think the presidential race will move ahead speedily." He
stressed that he will watch former Chief Cabinet Secretary Yasuo
Fukuda's move, saying, "Waiting for the (announcement of his
candidacy) until (Aug. 15) will benefit national interests."
Regarding his possible candidacy, Yamasaki stated: "I will not
clarify my intentions before the mid-August Obon holiday break."

Yamasaki criticized Prime Minister Koizumi's visits to Yasukuni
Shrine, noting:

"Official visits are unconstitutional. Private visits (by the
prime minister) are no different. China and South Korea will
protest strongly soon after the prime minister visits the shrine.
As a result, it will be impossible to hold summits with the
leaders of the two countries."

Yamasaki apparently sought to check Chief Cabinet Secretary
Shinzo Abe, a possible post-Koizumi contender, who supports
Koizumi's visits to the Shinto shrine.

13) 2006 LDP presidential election: Koizumi to announce his
support for particular candidate in September in consideration of
Mori; begins paving way for Abe

MAINICHI (Page 2) (Abridged slightly)
June 20, 2006

Prime Minister Junichiro Koizumi indicated in a press conference
yesterday that he would clarify his support for an LDP
presidential candidate timed with the official kickoff of the
election campaign, apparently in an effort to pave the way for
greater support for Chief Cabinet Secretary Shinzo Abe, his
favorite. Support for Abe is growing in recent public opinion
surveys on presidential candidates, while that for former Chief

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Cabinet Secretary Yasuo Fukuda is leveling off. Koizumi's
strategy is to hand over the baton to his successor while keeping
momentum through such means as his diplomatic engagements,
including his upcoming visit to the United States, and
overhauling the nation's revenues and expenditures as a package.

"He must deal with matters flexibly while using both hard and
soft approaches. He must also be prepared to face backlashes from
within the party in efforts to convince people."

Koizumi discussed some requirements for his successor as if to
offer words of encouragement to Abe.

Earlier, on June 15, Koizumi met with former Prime Minister
Yoshiro Mori to discuss the LDP presidential race. In the
session, Mori warned Koizumi not to designate anyone as his
successor. Koizumi expressed his intention to wait for doing so
until early September when the presidential election would be
officially announced, while sticking to his policy of making it
clear where he stands on the race before hand. In 1987, Prime
Minister Yasuhiro Nakasone designated Secretary General Noboru
Takeshita as his successor. Koizumi does not envisage a similar
scenario. However, if Koizumi speaks of his favorable candidate,
that would be a de facto designation of his successor.

Koizumi may not announce his support for any particular candidate
until the official kickoff of campaigning out of consideration
for Mori. But if his clout is extremely low at that point,
Koizumi's designation of his successor would lose its magical
power. In the Mainichi Shimbun's June 17-18 opinion poll, Abe's
support rate increased 4 points from the previous month to 42%,
while Fukuda's rate dropped 1 point to 19%. Fukuda's support rate
is leveling off.

A former LDP cabinet minister explained Koizumi's comment this
way: "Because there is already a clear trend in favor of Mr. Abe,
the prime minister is trying to back him in a modest manner."

But whether or not the prime minister visits Yasukuni Shrine on
the August 15 end-of-the-war anniversary is still a delicate
matter closely associated with the presidential race. Koizumi is
likely to make a final decision while keeping in mind how his
shrine visit would affect Abe.

14) Poll: Abe leads Fukuda in post-Koizumi race

YOMIURI (Page 1) (Abridged)
June 20, 2006

In a recent face-to-face nationwide public opinion survey
conducted by the Yomiuri Shimbun on June 17-18, respondents were
asked who they thought would be the most appropriate person to
become Prime Minister Koizumi's successor, and they were asked to
pick one out of five lawmakers in the ruling Liberal Democratic
Party. In this popularity rating, Chief Cabinet Secretary Abe
topped all others at 44%. Yasuo Fukuda, one of Abe's predecessors
in the CCS post, ranked second at 19%. The results of previous
polls and the one taken this time cannot be simply compared
because the number of post-Koizumi candidates was narrowed down
this time from the last survey taken in May. However, Fukuda, who
closed in on Abe in last month's survey, went down in the latest
survey, with Abe rising. The margin has now widened. Fukuda has

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yet to clarify whether he will run in the LDP presidential
election.

Abe ranked top for the fifth month in a row. Among other
candidates, Foreign Minister Aso stood at 4%, with Finance
Minister Tanigaki at 2%. Among LDP supporters, Abe was at 63% and
Fukuda at 19%.

In the survey, respondents were also asked if they were
interested in the LDP race. In response to this question, a total
of 72% answered "yes." Respondents where further asked to pick
one or more issues for the LDP presidential election. In
response, the most common answer was a reform of pension,
healthcare, and other social security systems at 53%, followed by
economic and employment measures at 47%.

The approval rating for the Koizumi cabinet was 52.0%, down
2.4percentage points from the last survey.

15) Kyodo poll: 45% favor Abe as successor to Prime Minister
Koizumi; 24% support Fukuda

TOKYO SHIMBUN (Page 2) (Full)
June 20, 2006

According to a poll Kyodo News Service conducted on June 17-18,
Chief Cabinet Secretary Shinzo Abe was the most suitable lawmaker
to succeed Prime Minister Junichiro Koizumi, obtaining 45.6%
support, up from 40.1% in the May survey. While 24.3%, down from
the 31.4% of the previous poll, favored former Chief Cabinet
Secretary Yasuo Fukuda. The gap between Abe and Fukuda widened to

SIPDIS
21.3%. Abe essentially expressed on May 24 his intention to run
in the Liberal Democratic Party (LDP) presidential race, while
Fukuda has not clarified his position. Fukuda's reluctance to
explicitly declare his intention to run in the election is
believed to have eroded support for him.

Foreign Minister Taro Aso secured 4.3% (4.5% in the previous
poll) and Finance Minister Sadakazu Tanigaki obtained 2.6% (2.7%
in the May poll). Senior Vice Justice Minister Taro Kono came
fourth with 2.9% (1.6% in the previous survey),passing Tanigaki.

Those who favored Abe were asked the reasons for their choice,
and 23.0% cited his diplomatic ability to improve relations with
China and South Korea, with 19.1% hailing his leadership
abilities. Of those who favored Fukuda, 42.5% hoped for his
diplomatic skills to repair the strained ties with China and
South Korea. The respondents expected him to reform Asia
diplomacy. Of the respondents supporting Aso, the majority
expressed hopes for his diplomatic capabilities. About half the
respondents who favored Tanigaki hoped for financial
reconstruction. Of those who supported Kono, many expected him to
reform the social security system.

16) Support for resumption of commercial whaling; IWC plenary
session adopts declaration by margin of one vote

SANKEI (Page 2) (Full)
June 20, 2006

The International Whaling Commission (IWC) at its plenary session
held in St. Christopher Nevis in the Caribbean Sea adopted a

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declaration promoted by Japan seeking the normalization of the
functions of the commission by a 33-32 vote. The declaration
calls for the withdrawal of the temporary suspension of
commercial whaling adopted in 1982. It is a step forward to the
resumption of commercial whaling.

The declaration was jointly proposed by 30 pro-whaling countries,
including Japan. This is the first time that the number of pro-
whaling countries topped that of anti-whaling counties. However,
since the resumption of commercial whaling requires support from
more than three quarters of members at a plenary session, the
declaration has no binding power. Even so, it was the first major
achievement for pro-whaling countries.

However, anti-whaling countries, such as Britain and New Zealand,
were against the adoption of the declaration. The skirmish
between pro-whaling countries and anti-whaling countries will
likely further heat up.

Touching on the adoption of the declaration that supports the
resumption of commercial, Agriculture, Forestry and Fisheries
Vice Minister Mamoru Ishihara yesterday noted: "In view of the
future of the IWC, I am very pleased that the declaration was
adopted." He then added: "We will make steady efforts next year
as well to ultimately garner support from three quarters of
members."

17) Chugai Pharmaceutical uses serum derived from US cattle;
Mistake occurred in process of switching to material from other
countries; Voluntary recall begins

SANKEI (Page 31) (Lead para.)
June 20, 2006

It was learned that Chugai Pharmaceutical Co., a major drug
maker, discovered that it used serum derived from US cattle
embryos, whose use is prohibited in Japan, as raw materials for
two medicines it manufactured and sold. It has already started
recalling about 900,000 products that had been shipped to 11,000
hospitals throughout the nation. In order to avoid the risk of
BSE contamination, the use of serum that was derived from embryos
of US cattle has been banned, in principle, since 2004. Chugai
Pharmaceutical explained, "It was a simple mistake. The risk of
damage to health is extremely low." Judging that the case is a
violation of the Pharmaceutical Law, the Ministry of Health,
Labor, and Welfare intends to check whether there are similar
cases involving other pharmaceutical companies.

18) Deregulatory requests from Nippon Keidanren; Compliance rate
drops to 47% in fiscal 2005

ASAHI (Page 4) (Full)
June 20, 2006

Nippon Keidanren (Japan Business Federation) yesterday revealed
that the compliance rate of deregulatory requests it submitted to
the government dropped to 47% in fiscal 2005, down 2 points from
49% posted in fiscal 2004 and 13 points from 60% recorded in
fiscal 2003.

The business organization noted that the reason for the drop in
such a ratio is that bureaucrats have begun taking the initiative

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of regulatory reform since fiscal 2004.

The Japan Business Federation submits 200 to 300 requests a year
to the government. Since the government's Regulatory Reform and
Privatization Promotion Headquarters, chaired by Prime Minister
Koizumi, replaced the private sector-led Comprehensive Regulatory
Reform Council in fiscal 2004 as a point of contact for the
submission of requests, Nippon Keidanren's deregulatory requests
have been handled in a routine manner, as the Industrial Affairs
Headquarters put it.

SCHIEFFER