JAPANESE MORNING PRESS HIGHLIGHTS 06//06

UNCLAS SECTION 01 OF 10 TOKYO 003491

SIPDIS

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SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 06//06


Index:

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

Korean Peninsula issues:
4) President Roh stresses need for ROK defense capability against
Japan
5) Taepodong-2 missile crisis could be prolonged
6) NPA says must assume that Taepodong-2 missile might drop on Japan


Defense and security issues:
7) 50% of public positively evaluate USFJ realignment, 38% do not in
Yomiuri poll
8) Defense white paper for 2006 stresses concern about North Korean
missiles, China's rapid military buildup
9) LDP project team proposes Japanese-style CIA
10) LDP team proposes Cabinet-level intelligence council

Iraq contributions:
11) Prime Minister Koizumi thanked by Iraq's prime minister for
GSDF's contributions
12) Chief Cabinet Secretary Abe lists three conditions for eventual
pullout of ASDF in Iraq
13) GSDF member who served in Iraq recounts lessons learned

Foreign aid:
14) LDP expenditures reform team seeks to trim ODA outlays by 100
billion yen, cut 3 trillion yen from local public works projects
15) Foreign Minister Aso says slicing ODA program violates Prime
Minister Koizumi's international commitment

Political agenda:
16) Survey of 100 major companies shows preference for Yasuo Fukuda
over Shinzo Abe as next prime minister
17) New Komeito to speed up party convention to September, mindful
of extra Diet session in fall, by-election
18) Foreign Minister Aso stresses that prime ministerial visits to
Yasukuni Shrine is a domestic issue

19) Hitachi, GE to jointly build nuclear power plant in US, the
first new facility in 30 years

Articles:

1) TOP HEADLINES

Asahi, Mainichi, Yomiuri, Sankei & Tokyo Shimbun:
16-year-old boy arrested on suspicion of arson and killing his
mother, brother, sister

Nihon Keizai:
Hitachi, GE receive order for construction of nuclear plant in US;
first construction in 30 years

2) EDITORIALS

Asahi:
(1) Anniversary of the end of the battle of Okinawa: Remembering the
tragedy and madness

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(2) Financial Affairs Agency: What action it will take after
punishing one while giving a warning to hundreds?

Mainichi:
(1) Falsified quake-resistance data: Investigations do not ensure
safety
(2) Promotion of new entry into mail delivery service: Ideas
necessary for maintenance of uniform services

Yomiuri:
(1) Mitsui Sumitomo Insurance: Fundamentals of insurance forgotten
(2) Ruling on murder of mother and child: Special treatment for
juvenile killer not permitted

Nihon Keizai:
(1) Taxi business needs to break away from trying to match supply
and demand
(2) Reliability of insurance wavering

Sankei:
(1) Punishment of Mitsui Sumitomo Insurance: Insurance sector needs
to review its problems
(2) Cloned human embryos: Difficulties must be overcome for
regenerative medicine

Tokyo Shimbun:
(1) Mitsui Sumitomo Insurance: It's outrageous to disregard clients
(2) Takamatsuzuka mural: Plan to dismantle stone chamber should be
dropped

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, June 22

NIHON KEIZAI (Page 2) (Full)
June 23, 2006

10:08
Met at Kantei with Economy, Trade and Industry Minister Nikai,
followed by Vice METI Minister Sugiyama, and Resources and Energy
Agency Director General Kodaira.

11:00
Met LDP Secretary General Takebe.

12:30
Met over lunch with BOJ Governor Fukui, Vice Governor Iwata, Finance
Minister Tanigaki, Economic and Fiscal Policy Minister Yosano, and
Chief Cabinet Secretary Abe.

14:29
Met Administrative Reform Minister Chuma.

15:00
Met Ambassador to the US Kato, Deputy Foreign Minister Nishida and
North American Affairs Bureau chief Kawai.

16:04
Met Rotary International President Stenhammar and others.

16:33
Attended a cabinet meeting. Afterward met Foreign Minister Aso,

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Tanigaki, Nikai, Agriculture, Forestry and Fisheries Minister
Nakagawa, and others.

17:33
Attended a meeting of the Council on Economic and Fiscal Policy.

18:55
Received a telephone call from Iraqi Prime Minister Maliki in the
presence of MOFA Middle Eastern and African Affairs Bureau chief
Yoshikawa and Defense Agency Defense Operations Bureau chief
Yamazaki.

19:23
Returned to his residence.

4) Takeshima/Dokdo issue: ROK president emphasizes need for
enhancement of defense capability, noting, "We need to ready
ourselves for Japan's provocation"

ASAHI (Page 7) (Full)
June 23, 2006

Tadahisa Takatsuki, Seoul

During a meeting yesterday with senior officials of the National
Maritime Police Agency and others, South Korean President Roh Moo
Hyun emphasized the importance of improving his country's deterrent
capability in preparation for a possible clash with Japan in waters
around Takeshima, referring to his country's response to the
sovereignty issue over Takeshima/Dokdo islets claimed by both Japan
and South Korea. The president said: "I think it's important for us
to have the defensive capability to make the other side think there
would be more harm than benefit in taking a provocative act."

According to Blue House officials, the president noted, "We have a
strong enough defensive capability to make Japan give up on the idea
of taking a provocative act," adding, "What I mean is not that we
will build combat capability strong enough to defeat Japan, but we
will instead build military strength strong enough to deal with an
unforeseen incident in the East Sea (the Sea of Japan),and if
things go beyond that, politics will handle them."

5) Crisis over North Korea's Taepodong-2 could be protracted

SANKEI (Page 2) (Excerpts)
June 23, 2006

Ruriko Kubota, Seoul

Media have reported that North Korea is preparing to launch a
long-range Taepodong-2 missile. Amid the United States refusing to
hold bilateral talks with North Korea, it is feared that the
"missile crisis" may be protracted, as Pyongyang has begun to send,
though indirectly, a message that the missile launch may come in one
month or in one year. The test-firing of a missile is North Korea's
most effective diplomatic leverage toward the US. Some observers
take the view that North Korea may not easily use its ace in the
hole.

Chosen Ilbo, the organ newspaper of the General Federation of Korean
Residents in Japan (Chongryon),on June 21 carried an article
titled, "The story of a Taepodong-2 test-firing is a US

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fabrication." The article stated: "The US and Japan fabricated the
Taepodong story with the aim of winning over world opinion to their
hostile feelings (toward North Korea)." The article claimed that
what everyone is watching is actually the transport rocket
Baekdusan-2 and the satellite Kwangmyongsong-2. It argued that North
Korea, as an autonomous country that possesses satellites, "can
launch them at any time, even one month or one year later," without
interference from other countries.

6) National Police Agency director general: Measures being worked
out on assumption of missile debris falling on Japan

SANKEI (Page 2) (Full)
June 23, 2006

In connection with media reports that North Korea could be ready to
test-fire a ballistic missile, National Police Agency Director
General Iwao Uruma said in a press conference yesterday: "We will
hammer out response measures on the assumption of a worst case
involving debris or a warhead falling on Japan."

Uruma remarked:

"If the warhead or debris falls on Japanese territory and damage is
caused, we will engage in rescue operations. In the event of such
pieces falling in the mountains, it will be necessary to check for
nuclear, biological, or chemical reactions. We are working out
countermeasures, assuming that that the missile-launch news could
cause the public to panic."

7) Poll: 50% appreciate USFJ realignment accord

YOMIURI (Page 2) (Full)
June 23, 2006

An estimated 50% of the Japanese public positively evaluate the
Japanese and US governments for reaching agreement to realign US
forces in Japan, the Yomiuri Shimbun found from its recent
face-to-face nationwide public opinion survey conducted June 17-18.
Negative answers accounted for 38%.

The agreed realignment of US forces in Japan includes relocating
Futenma airfield in Okinawa Prefecture to another location in the
prefecture and redeploying US Marine Corps troops from Okinawa to
Guam. In the survey, respondents were asked if they thought these
realignment steps would alleviate Okinawa's base-hosting burden. In
response to this question, 52% answered "no," with 36% saying "yes."
As seen from these figures, negative views outnumbered positive
ones.

In the realignment process, Japan will pay in part for the
redeployment of US Marines to Guam. Japan will also build new
facilities for US military use at its own expense. In the survey,
respondents were asked if they thought the government has given
sufficient explanation to the public about Japan's cost sharing.
Those who picked "no" totaled 87%, showing that the general public
does not feel the government has fulfilled its accountability. "Yes"
accounted for only 8%.

8) Defense white paper expresses concern about North Korean
missiles, warns of China's military expansion


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NIOHN KEIZAI (Page 2) (Full)
June 23, 2006

The Defense Agency will publish its defense white paper for 2006 in
July. According to the outline released yesterday, the white paper
expresses concern about North Korea's nuclear and missile
development programs. North Korea is reportedly making preparations
to launch a Taepodong-2 long-range ballistic missile. The white
paper also warns of China's increased defense spending and military
modernization and calls for China to ensure transparency. In
addition, it also stresses the importance of strengthening Japan's
relations with India.

The white paper has a new section about "strengthening Japan-US
security arrangements" that is aimed at promoting the upholding of
favorable Japan-US relations. In this section, the white paper
underscores the significance of realigning US forces in Japan,
specifying the planned relocation of Futenma airfield to a coastal
area of Camp Schwab. With North Korea and the Taiwan Straits in
mind, the white paper upholds "regional stability" and plays up the
US military presence. In connection with a bill to upgrade the
Defense Agency to the status of a ministry, the white paper says
Japan will step up its readiness for emergencies and will make
positive efforts to contribute to peace and stability in the
international community.

9) LDP team proposes establishment of Japanese-version of CIA to
strengthen intelligence functions

TOKYO SHIMBUN (Page 3) (Full)
June 23, 2006

The Liberal Democratic Party's study team on enhanced national
intelligence functions, chaired by former Foreign Minister Nobutaka
Machimura, produced a set of proposals yesterday calling for the
establishment of an external intelligence body under the Cabinet
Secretariat similar to America's Central Intelligence Agency (CIA)

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or Britain's Military Intelligence 6 (MI6). The team will make the
proposal to the government shortly.

Based on the slaying of Japanese nationals in Iraq, the suicide of a
Japanese diplomat at the Consulate General in Shanghai, and other
incidents, the proposal says: "Japan's intelligence functions are
weak and insufficient. Enhancing external intelligence functions is
imperative."

Aimed at building cooperative relations with foreign intelligence
organizations, such as the CIA, the proposal calls for raising the
status of the cabinet intelligence director to the level of the
deputy chief cabinet secretary to place the new organ under him.
Personnel form the Foreign Ministry, Cabinet Intelligence and
Research Office, National Police Agency, and Defense Agency will be
fostered into a group of intelligence experts. The proposal also
calls for improving the law to establish the post of intelligence
assistance to comprehensively evaluate intelligence under the
cabinet intelligence director and to mandate the personnel to keep
national secrets.

10) LDP proposes setting up cabinet-level intelligence council,
training counterintelligence professionals

YOMIURI (Page 2) (Full)

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June 23, 2006

The ruling Liberal Democratic Party yesterday held a meeting of its
study group on Japan's consolidation of its intelligence functions.
The study group, with former Foreign Minister Nobutaka Machimura
presiding, worked out a report of recommendations featuring
proposals to set up a cabinet-level intelligence council, which will
set the direction for intelligence-gathering, and to establish an
external intelligence service in the Cabinet Information Research
Office. The report suggests the need for the proposed external
intelligence service to be staffed with trained experts on
counterintelligence and counterterrorism. The LDP will call on Prime
Minister Koizumi and his successor to translate the recommendations
into action.

In addition, the report proposes upgrading the cabinet information
officer, who heads the CIRO, to the status of a deputy chief cabinet
secretary. The report also calls for the CIRO to have information

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assistant officers from other government offices and private circles
collect and analyze information. In addition, the report proposes
setting up an intelligence committee in both Diet chambers to
oversee government intelligence activities. Committee members are
required to protect secrets.

Main points from LDP proposals

-- Set up a cabinet-level intelligence council, including the prime
minister, the foreign minister, the Defense Agency director general,
and the Public Security Investigation Agency director general.
-- Upgrade the Cabinet Information Officer to the status of a deputy
chief cabinet secretary. The CIO briefs the prime minister and the
chief cabinet secretary on intelligence-gathering activities.
-- Set up an external intelligence service, which is to be staffed
with trained experts, under the CIO.
-- Create a common set of information security guidelines for all
government ministries and agencies and establish a law requiring
confidentiality.

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11) In teleconference, Iraqi prime minister expresses gratitude to
Prime Minister Koizumi for GSDF reconstruction assistance

MAINICHI (Page 3) (Full)
June 23, 2006

Prime Minister Junichiro Koizumi yesterday talked on the phone with
Iraqi Prime Minister Maliki. Maliki expressed gratitude for Japan's
reconstruction assistance via its Ground Self-Defense Force (GSDF)
troops, whose pullout from Iraq has been decided on. Maliki noted,
"They have left the Iraqi people with a good impression of Japan,"
adding, "I hope the two countries will now strengthen relations in
the political, economic, and particularly investment areas, in
addition to reconstruction."

In response, Koizumi emphasized, "I'd like to continue assistance in
a way in which the Iraqi people will appreciate that Japan helped
Iraq during a difficult time via airlifting by the Air Self-Defense
Force." Koizumi invited Maliki to visit Japan.

12) Abe lays down three conditions for timing of ASDF withdrawal
from Iraq

ASAHI (Page 4) (Full)

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June 23, 2006

Chief Cabinet Secretary Shinzo Abe yesterday made this remark about
the timing of the withdrawal from Iraq of the Air Self-Defense Force
(ASDF),which will expand its airlift operations in that country
following the pullout of the Ground Self-Defense Force (GSDF): "We
would like to properly judge and then decide based on such
conditions: the state of public security, the situation involving
the multinational force's efforts; and the situation involving the
country's reconstruction. He indicated that in his view three of the
four conditions applied to the GSDF's withdrawal applied to the
ASDF's pullout, the fourth condition being progress in the political
process (which has already happened). He was replying to a question
from Minshuto (Democratic Party of Japan) lawmaker Kazunori Yamai in
closed session of the Lower House Iraq Reconstruction Assistance
Special Committee.

13) GSDF's Iraq mission of two years and a half: Interviews with
returned senior GSDF officers

ASAHI (Page 37) (Abridged)
June 23, 2006

The Japanese government has sent a total of 5,500 Ground
Self-Defense Force troops to the southern Iraqi city of Samawah on
their mission in Iraq that lasted two years and a half. What the
SDF troops experienced and learned from the country's first dispatch
of troops to a country in combat? Should Japan continue such an
overseas mission? The Asahi Shimbun asked returned senior GSDF
officials and others about their experiences in Iraq.

Colonel Masato Taura served as the leader of the second
reconstruction support team in Samawah for seven months from August
2004 through January 2005. Sovereignty was transferred to the
provisional Iraqi administration in June 2004. Battles between US
forces and Islamic Shiite militants were intensifying in Najaf in
August. During Taura's mission in Samawah, there were seven attacks
on the GSDF camp. A shell penetrated a storage container once.

One of the major duties was to negotiate with regional and tribal
chiefs to fairly allot school and road repair work. Taura often
presented pictures to explain priority projects, but regional chiefs
always insisted that their communities should take precedence.

It was not clear if attacks on the GSDF camp were directly connected
to local discontent. But the day after an attack, a local came over
to the camp to offer his assistance to protect the camp. But as the
GSDF turned down the offer, the man simply left the camp, sneering.
It remains unknown if he was the one who actually fired a shell at
the GSDF camp. The GSDF contingent called it the "shell-firing
business."

Taura had to discuss projects with people of different culture amid
the roar of artillery. What he experienced in Samawah was
completely different from that of peacekeeping operations under the
United Nations.

He has also acquired the proper skills to handle weapons. It is
critical to determine the right timing to shoot at an armed militant
approaching. Taura said: "We cannot learn the right timing from
papers alone. The contingent was composed of troops from across
Japan and standards were established training, and that's our

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asset."

Japanese troops have not fired at anyone. But should Japan continue
sending troops to areas involving great risks. Taura simply said:
"As an SDF officer, I cannot discuss that. We must be ready for
anything in compliance with the government's order."

Colonel Yuki Imaura stayed in Samawah between June and August 2004
as the leader of the second reconstruction support group. During
that period, grenades landed in the GSDF camp on four occasions.

Imaura noted: "The Iraq mission has opened a new door for the SDF.
What we experienced in Iraq gives us confidence."

14) LDP reform panel proposes slashing spending on local public
works projects by 3 trillion yen, ODA outlays by 100 billion yen

YOMIURI (Page 2) (Full)
June 23, 2006

The Liberal Democratic Party's Expenditure Reform Project Team
started arrangements yesterday to cut the government's disbursements
to local governments for their independent projects by 3 trillion
yen over the five years until FY2011. In FY2006, about 23.6 trillion
yen has been set aside for local independent projects based on local
fiscal plans, so outlays for local projects will be reduced by 13%
over five years. The amount of tax subsidies allocated to local
governments in FY2011 will be set at the same level as in FY2006.

In the FY2006 budget, about 760 billion yen has been earmarked for
official development assistance (ODA). The LDP panel also plans to
trim the ODA budget by about 100 billion yen over five years, with
about a 2.8% annual drop. The average margin of reduction in the ODA
budget over the past five years was 5.6%. This fiscal year's drop is
half that.

In a press conference yesterday, Foreign Minister Aso rapped the LDP
panel's proposal, saying: "Setting negative growth for the ODA
budget over the coming five years goes against the international
pledge made by the prime minister."

Financial aid to private educational institutions totals about 435
billion yen in the FY2006 budget. The LDP panel proposes a 1% yearly
cut in the budget.

15) ODA cut plan runs contrary to the prime minister's pledge,
cautions Foreign Minister Aso

TOKYO SHIMBUN (Page 2) (Full)
June 23, 2006

The Liberal Democratic Party's (LDP) Expenditure Reform Project Team
is now looking into the possibility of cutting the government's
official development assistance (ODA) budget. Commenting on the
move, Foreign Minister Taro Aso during yesterday's press briefing
called for a cautious approach, noting: "Prime Minister Koizumi has
pledged to increase Japan's ODA by 10 billion dollars over five
years and double the amount provided to Africa over three years. If
Japan cuts the ODA budget, it would be sending a message contrary to
what has been pledged."

16) Asahi survey of 100 major companies finds Fukuda favored over

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Abe for the next prime minister; Major companies: 15 to 12; regional
business leaders: 22 to 17

ASAHI (Page 1) (Excerpt)
June 23, 2006

In a questionnaire sent by the Asahi Shimbun to the top officers of
100 major companies across the nation, one of the questions asked
was whom did they think was the appropriate person to be prime
minister after Junichiro Koizumi. Out of the 31 companies that put
down a specific name, 15 favored former Chief Cabinet Secretary
Yasuo Fukuda and 12 opted for current Chief Cabinet Secretary Shinzo
Abe. In a parallel survey sent to the leadership of 94 business
associations, such as the chambers of commerce in 47 prefectures and
regional financial institutions, of the 50 that put down a specific
name, 22 chose Fukuda and 17 picked Abe.

Although many companies and organizations avoided picking a specific
name, it was clear that business circles have a strong preference
for Fukuda, despite the high rate of public preference for Abe in
opinion polls. The survey of 100 companies was carried out during
June 1-16, and the regional survey during June 1-20.

17) New Komeito to speed up party convention to September to start
new leadership early with eye on extraordinary Diet session,
by-election

ASAHI (Page 4) (Excerpt)
June 23, 2006

The New Komeito at a meeting of party central executives decided to
speed up the timing of its party convention that occurs once every
two years to September instead of the originally scheduled October

14. It was judged a wise policy to allow its new executive lineup an
early start given the high probability that an extraordinary Diet
session will be convened at the end of September in order to deal
with the many important bills now under continuing deliberation. In
addition, a unified by-election will be proclaimed on October 10.

18) Prime minister's Yasukuni visits are domestic affair, says
Foreign Minister Aso

TOKYO SHIMBUN (Page 2) (Full)
June 23, 2006

Foreign Minister Taro Aso yesterday gave a speech at the Asia
Strategy Study Council led by the Niwa-Koga faction, Tanigaki
faction and former Kono faction. Commenting on the prime minister's
visits to Yasukuni Shrine, Aso noted: "The prime minister's Yasukuni
visits are a domestic affair. I do not think that they are an
international issue. I told the same thing to China." He thus
stressed his thinking that the Yasukuni issue should not be made a
diplomatic issue.

He underscored that Japan-China relations are improving, noting: "I
suggested a meeting to Foreign Minister Li Zhaoxing. He immediately
agreed to do so. We will meet again next month." He took an
optimistic outlook: "Since the bilateral relationship has become
complicated over the past several years, it cannot be repaired
immediately. However, exchange is making progress. The tensions will
disappear over the mid-to long-term."


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19) Hitachi, GE receive order to construct nuclear power plants in
US; First such project in 30 years; Operation to start in 2014;
Project to cost 600 billion yen

NIHON KEIZAI (Top Play) (Excerpts)
June 23, 2006

Hitachi will construct nuclear plants in Texas in cooperation with
General Electric. The total project cost will amount to 5.2 billion
dollars (approximately 600 billion yen). Construction work will
likely start in 2009 and operation in 2014. Amid the prospects for
an expansion of the nuclear power plant market due to the rise in
crude oil prices and a subsequent trend toward revising energy
policy, Toshiba purchased Westinghouse, a leading US nuclear energy
company. Hitachi has strengthened ties with GE to go on the
offensive in the global energy market.

Since the Three Mile Island accident in 1979, no nuclear power
plants have been built in the US. The one planned for Texas is going
to be the first of a series, following construction authorization
after a hiatus of 30 years.

Hitachi and GE will receive an order for the construction of two
plants, which NRG Energy, a leading US power generating and
wholesaling company, plans to build in a suburb of Houston, Texas.
On June 19, NRG Energy formally conveyed its plan to build nuclear
power plants to the Nuclear Power Regulatory Commission, which is in
charge of setting US nuclear power policy. On receiving an
application for the construction of such plants with a detailed plan
next year, the panel will screen the safety and feasibility of the
project.

The plants are a modified version of the boiling water reactor
(BWR). Hitachi has a track record of having built seven units of
this type of reactor (including one now under construction) in
Japan, etc. Its power output per unit is 1.35 million kilowatts.
Hitachi has informally received an order from NRG Energy. A formal
signing of a contract for the project will likely take place next
year.

The two companies will work out their respective roles. Hitachi will
be responsible for manufacturing and installing reactor vessels and
steam turbines, the main equipment of the nuclear power plant. Since
GE has become a service and engineering company in the nuclear
energy business, it is expected to be responsible for negotiations
with the government to obtain authorization for the project and for
procuring fuel. Hitachi has supplied equipment to GE in the past,
but those projects were carried out under the leadership of GE in
terms of receiving orders and constructing plants. Hitachi has
constructed a total of 23 nuclear power plants in Japan and Taiwan.
It has a sales record of 200 billion yen a year in the
nuclear-energy-related business.

SCHIEFFER