DAILY SUMMARY OF JAPANESE PRESS 01/24/06

UNCLAS SECTION 01 OF 08 TOKYO 000377

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SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 01/24/06

INDEX:

(1) Prime minister's replies in interpellation session

(2) Missile data leak exposes North Korea's continued spy
activities in Japan to collect intelligence

(3) Livedoor loses main pillar with arrest of President Horie3

(4) With Shimabukuro elected as Nago mayor, government to start
Futenma talks full-scale

(5) Japanese companies eager to launch overseas projects to
reduce CO2 to acquire emission rights in return; Nippon Steel
wins China's approval as first case in industry; Richo provides
energy saving assistance in India

(6) Editorial: Nago mayoral election; Don't misread the popular
will

ARTICLES:
(1) Prime minister's replies in interpellation session

YOMIURI (Page 13) (Excerpts)
January 24, 2006

(US beef)

The US must abide by the rules agreed on between Japan and the
US. Japan has asked the US government to probe into the cause of
the incident and come up with preventive measures. Regarding a
measure to mandate keeping the track records of imported beef,
such a requirement might become a problem in terms of
international agreement, so we will fully discuss the matter in a
cautious manner.

(Asia diplomacy)

Establishing an affluent and stabilized Asia is indispensable for
the safety and prosperity of Japan. We will aim at creating an
open Asia that respects freedom and democracy while recognizes
its diversity.

(Japan-China, Japan-South Korea relations)

China and South Korea are important neighbors for our country,
and Japan is willing establish a future-oriented relationship
with these countries based on mutual understanding and trust by
deepening bilateral cooperation from an overall perspective,
although we certainly have different perceptions on some issues.

(Japan-North Korea talks)

We will take up various issues, including abduction, security,
and diplomatic normalization, in a drive to improve overall
relations between Japan and North Korea. On the abduction issue -
Japan's top diplomatic priority, the government will do its
utmost to settle the issue, while urging Pyongyang to send
Japanese abductees still in the North back to Japan, uncover the
details of each case, and to hand over suspects to Japanese
authorities.

(Japan-North Korea normalization talks)

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The government still stands fast on the position of never
establishing diplomatic ties with North Korea unless a
comprehensive settlement is reached on the abduction issue, and
the issue of North Korea's nuclear and missile development
programs. Based on this policy stance, Japan will engage in talks
with North Korea.

(Japan-US alliance)

The Japanese and US governments, in cooperation with many
countries in the world, will jointly address various issues
facing the international community. In last fall's summit, we
agreed on the need to strengthen the Japan-US alliance in a
global context.

(Suicide of diplomat at Consulate General in Shanghai)

The government has protested to the Chinese government and urged
it to investigate the facts in the case. We are determined to
find out the truth, while discussing this issue in the Diet.

(US force realignment in Okinawa)

The current plan to realign the US forces in Japan was put
together based on the judgment that it was the best for
maintaining the current level of deterrence and lightening the
security burden on Japan. In an effort to reduce the burden on
Okinawa, relevant cabinet ministers have visited potential
candidate sites and given explanations to local communities on
the contents and direction of the plan. The government will
continue to make efforts to obtain local understanding and
cooperation in order to spur Okinawa development.

(2) Missile data leak exposes North Korea's continued spy
activities in Japan to collect intelligence

SANKEI (Page 30) (Full)
January 24, 2006

Another case illustrating North Korea's illicit activities to
collect Japan's defense intelligence has come to light. The
Korean Association of Science and Technology in Japan (KAST) has
obtained research data on the development of a new missile
system, sources said yesterday. North Korean spy cases cracked by
police authorities have testified to the fact that collecting
intelligence on Japan's defense capability has been one of the
important duties for North Korean agents, according to a police
source.

Many spy cases involving North Korean agents have come to light
since 1975, such as the Fuse case (cracked in 1976 by the Osaka
Prefectural Police),Toyoshima case (1977, Tokyo Metropolitan
Police Department),and Hyuga case (1981, Miyazaki Prefectural
Police). They revealed that the mission of North Korean spies in
Japan is to collect intelligence on the Self-Defense Forces.

In March 1985, the Metropolitan Police Department also cracked
the Nishiarai case in which a North Korean spy named Pak had
carried out activities for 15 years under the guise of a Japanese
citizen to recruit spies for North Korea, run a spy base in the
Far East Asia, and collect intelligence on Japan's defense
capability. Repatriated abductee Kaoru Hasuike, 48, has also

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indicated that a group of North Korean agents including "Pak" had
abducted him to the North.

The acquisition of the Ground Self-Defense Force's new surface-to-
air missile system by KAST under the pro-Pyongyang General
Association of Korean Residents in Japan can easily be regarded
as part of North Korea's long term efforts to collect Japan's
defense intelligence.

A source familiar with defense affairs noted:

"Ballistic missiles typified by the Rodong are vital strategic
weapons to North Korea. Collecting technical data on Japan's
defense equipment against ballistic missiles, such as the Aegis
system and a successor to the medium-range surface-to-air (SAM)
missile system, is expected to remain as a vital activity for
North Korea."

(3) Livedoor loses main pillar with arrest of President Horie

ASAHI (Page 2) (Excerpts)
January 24, 2006

The special investigation squad of the Tokyo Public Prosecutors
Office yesterday arrested Livedoor Co. President Takafumi Horie.
With the arrest of its president, the Livedoor group, which has
run businesses beyond its real strength based on the value of its
shares, has now lost its main pillar. The arrest of Horie, who
has led the group as a kind of billboard, and of three other
company executives on suspicion of violating the Securities and
Exchange Law will rock the company to its foundation. The ruling
Liberal Democratic Party (LDP),which was involved in Horie's
candidacy in last September's House of Representatives election,
appears shocked by his arrest. Dark clouds have now begun to
gather over Prime Minister Koizumi's structural reform
initiative.

Koizumi government shaken

"If they really violated the law, I think it is only natural that
they are being thoroughly investigated," Koizumi told reporters
last night.

Asked whether he felt a sense of apprehension about his policy of
economic vitalization through free market competition after
learning of the Livedoor scandal, Koizumi flatly responded, "They
are two different matters."

The LDP unofficially backed Horie in last year's Lower House
general election. Last August then LDP Acting Secretary General
Shinzo Abe characterized Horie as a symbol of Koizumi's
structural reform drive, stating, "New businesses have been
created by the Koizumi structural reform initiative." On the
first day of the official campaign for the Lower House election,
Heizo Takenaka, then minister in charge of economic and fiscal
policy, stated, "Prime Minister Koizumi, Mr. Horie and I will
band together." Secretary General Tsutomu Takebe praised Horie
last September, saying, "Mr. Horie and Prime Minister Koizumi are
like a father and son. (The prime minister) is like my brother
and (Mr. Horie) is like my son."

Last night, however, Takebe released this comment on the arrest
of Horie: "If the charges against him are proved, misleading the

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market and investors is serious. His arrest is regrettable
because I expected much of him as a manager in a new era." New
Komeito Secretary General Tetsuzo Fuyushiba told reporters: "I
think you in the mass media gave him much praise. What do you
think about him now?"

The scandal has now become a major issue at the ongoing Diet
session. The opposition camp is stepping up its offense. Minshuto
(Democratic Party of Japan) President Seiji Maehara last night
stated: "The LDP bears grave responsibility for its support for
him in the election. I intend to pursue thoroughly the LDP's
moral responsibility." The Japanese Communist Party released a
comment that went: "The Koizumi Cabinet has pressed forward with
deregulatory measures encouraging a money game." The Social
Democratic Party released a statement: "The government and LDP
should make efforts to shed light on the scandal and prevent a
recurrence, summoning those involved to testify to the Diet."

A former cabinet member of the ruling camp said, "The LDP cannot
evade its moral responsibility." An aide to the prime minister
claimed: "No negative impact will be on the prime minister
because he did not go to the electoral district and the LDP did
not endorse (Horie). But Mr. Takebe and Mr. Takenaka feel
embarrassed."

Another former cabinet minister said: "Support rates for the LDP
have begun to decline gradually. The party will suffer a body
blow (with the Horie scandal)."

(4) With Shimabukuro elected as Nago mayor, government to start
Futenma talks full-scale

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

Yoshikazu Shimabukuro won the mayoral election in Nago City,
Okinawa Prefecture, yesterday. Shimabukuro is more flexible than
the other two candidates toward holding talks with the government
on the issue of relocating the US Marine Corps Futenma Air
Station. Following his election, the government will step up
efforts to persuade local communities to accept the government's
plan to transfer the heliport functions to their city. Although
Shimabukuro is calling for overhauling the plan, the government
intends to try to gain local support by presenting economic
rehabilitation measures, based on the judgment that "it is
impossible to revamp the agreement reached between Japan and the
US." Since there is no time to waste, no one can predict whether
the impasse will actually be broken on the Futenma relocation
issue.



Government to present economic promotion measures to have local
communities host US bases

"We understand that the government's base realignment proposals
have been accepted," said Chief Cabinet Secretary Shinzo Abe in a
statement issued last night welcoming the outcome of the Nago
mayoral election. Defense Agency (JDA) Director General Fukushiro
Nukaga also expressed in a statement his expectation for local
communities' acceptance of the government plan, saying: "I would
like to give explanations with sincerity and conduct discussion
in a construction manner now."

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But although Shimabukuro was elected, it is unlikely that
prospects for a settlement of the Futenma issue will immediately
brighten. Shimabukuro has indicated that he would hold talks with
the government if an amendment plan is submitted, but it remains
unknown what revisions he is willing to accept. Under the present
situation, the Japanese and US governments will be able to
slightly alter the direction of the runway in order to somewhat
change flight courses," according to a senior JDA official.

In order to get local agreement for its plan, what the central
government can do now is to emphasize the presence of US bases
for the nation's security interests. Given this, the government
intends to come up with economic rehabilitation measures. The
government will hurriedly look into large-scale infrastructure
projects, such an extension of express highways and the monorail
line, as well as an expansion of Naha Airport.

Even if Nago City accept the government plan, however, Governor
Keiichi Inamine's approval will be necessary. The construction
period is said to be about five years. In order to complete the
construction work by fiscal 2012 as requested by the US, it is
necessary to launch a feasibility study regarding environmental
protection and other matters as soon as possible. Inamine is
unlikely to run in the gubernatorial election in November, but
the governor of each prefecture has authority to authorize the
use of public waters, so approval from the governor will become
necessary while Inamine stays in office.

In the government, some take an optimistic view, with one
official saying: "Should Nago give the nod, the governor may find
it difficult to decline the plan." It is also conceivable,
though, that the governor may hold fast to an agreement reached
between the central and Okinawa governments to build a military-
civilian airport on reclaimed land to the last. In such a case,
it would become necessary for the government to enact special
legislation to shift the reclamation right now given to governors
from them to the central government.

The government plans to submit bills related to US force
realignment in Japan to the Diet in April. It will be pressed to
make a decision on whether to incorporate the legislation on
reclamation authority in the bills.

(5) Japanese companies eager to launch overseas projects to
reduce CO2 to acquire emission rights in return; Nippon Steel
wins China's approval as first case in industry; Richo provides
energy saving assistance in India

NIHON KEIZAI (Page 11) (Abridged)
January 21, 2006

Japanese corporations, such as Nippon Steel Corp. and Richo
Company, Ltd., have actively been launching overseas projects to
reduce greenhouse gas emissions. As a country ratified the Kyoto
Protocol, Japan is required to reduce greenhouse gas emissions,
but the country is finding it increasingly difficult to meet its
targets, given the economy which has finally begun picking up. As
a result, an increasing number of Japanese companies from trading
firms to power companies to manufacturers have begun turning
their eyes to foreign countries to find a way out. The government
approved 23 such overseas projects last year, about four times
the number recorded in 2004.

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Last year, Japanese firms received government approval to launch
overseas projects that would allow them to have the right to emit
gases equivalent to an annualized 28 million tons of carbon
dioxide (CO2),which corresponds to 37 percent of the country's
annual reduction target. The government started allowing Japanese
companies to embark on overseas greenhouse reduction projects in

2002. In 2004, the government gave the go ahead to six projects.
An increasing number of firms are applying for government
approval with an eye on the reduction period between 2008 and

2012.

Manufacturing firms have particularly been eager to launch
foreign projects, as their efforts to reduce emissions of CO2 in
Japan have been less than satisfactory due to the construction of
new plants and other factors. The greenhouse gas reduction
business has traditionally been limited to trading firms and
power companies in anticipation of greater demand for energy.
Last year, Japan Steel obtained approval in China as the first
Japanese steel steelmaker.

Richo has also won the emission right overseas as the first case
in the precision industry with a view to greater production of
high-definition toners in Japan. The government has also approved
a project by a firm operating a greenhouse gas reduction fund
financed by 33 companies, including Toyota Motor, Sony, and
Sharp.

Earlier this year, the government decided to entrust Japan Steel
to assist India's Tata Steel in reducing CO2. The steel industry
accounts for 41.9 percent of greenhouse gases emitted by Japan's
industrial and energy sectors. Although emissions were on the
decline in the past, growing plans to increase high-grade steel
products have made it difficult to reduce emissions. The JFE
Group is also likely to make a move to win emission rights.

Matsushita Electric, which has decided to build an additional
plasma display panel plant in Japan, is planning to win emission
rights by saving energy at its Malaysia plant.

Under the Kyoto Protocol, Japan is required to reduce between
2008 and 2012 the collective emissions of greenhouse gases by six
percent from the 1990 levels. But in 2004, Japan's total
emissions of gases from industries and households grew 7.4
percent from the 1990 levels. Although Japanese companies are
endeavoring to cut back on gas emissions voluntarily, the
government may press Japanese industries harder to control
emissions.

Projects offering emission rights to Japanese corporations

CompanyCountryProject
Nippon Steel Corp., Mitsubishi Corp.ChinaCollecting and degrading
hydrochlorofluorocarbon
Richo Co.IndiaReducing CO2
Richo Co.El SalvadorReducing CO2
Japan Carbon Finance, Ltd.South AfricaCollecting and burning
methane
JMDChinaCollecting and degrading hydrochlorofluorocarbon
Shimizu Corp.ArmeniaCollecting methane for power generation

Note: Japan Carbon Finance is the company operating the Japan
Greenhouse Gas Reduction Fund financed by 33 Japanese companies,

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including Toyota Motor and Sharp. JMD is a company financed by
JGC Corp. and Marubeni Co.


Overseas projects less costly

An increasing number of Japanese manufacturers are trying to
obtain emission rights by cutting back on greenhouse gas
emissions abroad in view of playability. Although their Japanese
plants have taken various measures to increase production
efficiency and introduce energy-saving equipment, investments in
such efforts are sometimes too costly. In contrast, costs for
acquiring emission rights in other countries are cheaper,
allowing Japanese firms to export energy-saving technologies, as
well. Each company's strategy to reduce greenhouse gases is
likely to affect their competitiveness in the long run.

A Nihon Keizai Shimbun survey showed that reducing one ton of
greenhouse gases costs 90,000 yen in Japan, an advanced country
in energy saving. The cost for acquiring emission rights is 5 to
10 dollars. Although the price may go up with an intensifying
race for emission rights between industrialized countries, the
price is still low at present.

METI: 11 industries acquired or studying acquiring emission
rights

The number of industries acquired or considering acquiring
greenhouse gas emission rights has increased from six last year
to 11, the Ministry of Economy, Trade and Industry (METI)
announced Jan. 20. Industries began considering acquiring rights
include industrial machinery, machine tool, and bearing. The METI
announcement testified to growing interest in emission rights by
manufacturers, in addition to the electrical and electronics
industries, which have already acquired some rights.

(6) Editorial: Nago mayoral election; Don't misread the popular
will

TOKYO SHIMBUN (Page 5) (Full)
January 24, 2006

In the latest Nago mayoral election, the center of contention was
whether to approve hosting an alternate base for the US Marine
Corps' Futenma Air Station. Yoshikazu Shimabukuro, who has
indicated a readiness to hold talks with the government on the
issue, was elected. Shimabukuro, though, is also opposed to the
current relocation plan. We hope that the government will reach a
settlement that reflects the popular will.

"All the three candidates are opposed to the coastal plan," said
Okinawa Governor Keiichi Inamine when he met Defense Agency
Director General Fukushiro Nukaga and other officials in Tokyo on
Jan. 23, the day after the mayoral election.

Inamine implied that the victory of Shimabukuro would not
necessarily lead to the Nago government's approval of the current
plan agreed on by the Japanese and US governments last fall to
relocate Futenma airfield's heliport functions to a coastal area
of Camp Schwab in the Henoko district of Nago. Inamine apparently
tried to apply pressure to future moves by the government.

The two other candidates were Munehiro Gakiya and Yoshitmi

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Oshiro. Both were against the plan. Shimabukuro said: "If the
government presents a modified plan that can convince the local
community, I will hold talks with the government." Since he made
this remark, the focus of attention was focused on policy
approaches to the Futenma relocation issue. As said by Governor
Inamine, the three candidates all opposed the coastal plan in the
election campaigning, and this fact carries heavy meaning.

Shimabukuro, though, took the strategy of underlining the need to
promote the local economy, without referring to the base issue in
his first statement on the day of official announcement of the
election. He proudly raised the daruma (good luck doll) given him
by Chief Cabinet Secretary Shinzo Abe.

Some observers harbor concern that Shimabukuro might accept the
coastal plan even if the government fails to revise the current
plan or present additional economic promotion measures.

Shimabukuro has voiced opposition to the coastal plan. If the
government does not to come up with a bold revision plan without
taking into consideration such factors as residents' safety,
noise control engineering, and environmental protection, he
should never give the plan the nod.

On the other hand, the government should not take the election
outcome as the public's consent to the coastal plan. If that is
the case, it will misjudge the public's will. The government
should brace up to address the difficult task of revamping the
current plan.

The Japanese and US governments mapped out the current coastal
plan after hard efforts because no progress was made in
construction work off the Henoko district in accordance with the
initial plan due to strong protests by residents. The plan was
initially designated as an interim report. Despite this, the US
has no intention to alter it.

In the earlier Japan-US defense summit, Defense Agency Director
General Nukaga asked at the outset: "Concessions from the US are
necessary in order to make realignment talks successful," but no
reply came from the US side. He thus failed to get new materials
to persuade local communities.

The government first must seriously consider why local
communities are opposed to the coastal plan and what measures
will be able to convince them. The government then should work
out a revision plan and present it to the US. There is no need to
hang onto the March 31 deadline for a final report.

The Futenma Air Station - surrounded by densely populated
residential areas - has continued to threaten the safety of
residents. It is an urgent task to stop using Futenma, but if a
second Futenma is built, it would be a meaningless move.

SCHIEFFER