JAPANESE MORNING PRESS HIGHLIGHTS 07/07/06

UNCLAS SECTION 01 OF 10 TOKYO 003789

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SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 07/07/06

Index:
1) Top headlines

2) Editorials

3) Prime Minister's daily schedule

4) North Korea's Taepodong-2 missile that failed was aimed at waters
off Hawaii

5) US confirms that North Korea readying another Taepodong missile
launch

6) Government on alert as North Korea prepares another missile
launch

7) President Bush, Prime Minister Koizumi to seek at G8 summit
statement of concern about North Korean missiles

8) China, Russia balking at UNSC imposing sanctions on North Korea
for missile caper

9) LDP's Yamasaki in Jakarta asks Indonesia's president to pass
along Koizumi message to North Korea on missiles, 6-party talks

10) Exports to North Korea that have military-use possibility to
require licensing under revised law

11) Hawks in LDP plan to use additional measures against North Korea
as a "pressure card"

12) Prime Minister Koizumi: Good thing the Taepodong launch did not
happen when I visited Presley home

13) Chief Cabinet Secretary Abe: Pyongyang planned missile launch as
tactic to force US into a dialogue

14) Minshuto's Hatoyama: China, Russia's reluctance to sanction
North Korea on missile launch reveals weakness of Koizumi diplomacy


15) JCP's Shii denounces North Korea for using missile threat

16) JDA chief Nukaga confirms speeding up of missile defense
deployment

17) Abe calls for strategic dialogues with US, Australia, India

18) Minshuto President Ozawa in Beijing meets possible successor to
President Hu

19) LDP's Koga wants Yasukuni Shrine turned into secular war
memorial

20) Economic forecast revised upward to 2 PERCENT real growth

Contents:
1) TOP HEADLINES

Asahi:
Missile launches by North Korea: China, Russia cautious about
slapping sanctions

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Mainichi:
Taepodong-2 missile damaged soon after launching; Debris fall into
nearby area; Japan, US confirm failure

Yomiuri:
St. Petersburg Summit chairman's summary statement to mention
concern over North Korea's missiles in response to proposal by Japan
and US; Leaders from major nations to call for missile-launch
moratorium

Nihon Keizai:
Government alert to another launch of Taepodong-2 missile; "The
launching of such a missile is fully possible," says deputy JDA
director general

Sankei:
Taeopodong-2 missile aimed at waters near Hawaii; US hardens its
stance; Likely to apply pressure for sanctions resolution

Tokyo Shimbun:
Government to call on G-8 Summit to issue statement condemning North
Korea over its missile launches with eye on pressuring that country

2) EDITORIALS

Asahi:
(1)UN resolution on North Korea's missile launches: Solidarity and
speed are essential
(2)The Korean Residents Union in Japan, the pro-Seoul Korean
residents group in Japan and the pro-Pyongyang General Association
of Korean Residents in Japan (Chongryon); Historic reconciliation
turned out to be fragile

Mainichi:
(1)UN resolution on North Korea's missile launches: China and Russia
should be aware of their heavy responsibility
(2)Press conference by Kim Young Nam: Do not be misled by North
Korea's intelligence tactics

Yomiuri:
(1)North Korea's missile launches: Adopting resolution at UNSC is
not the goal
(2)Bank of Japan's internal regulations: Setting up strict rules is
a step toward regaining trust

Nihon Keizai:
(1)China and Russia should act carefully in order not to incur
misunderstanding by North Korea
(2)WTO talks: Share the sense of emergency

Sankei:
(1)North Korea's missile launches: UNSC resolution with force behind
it is urged
(2)South Korean vessels carrying out investigation in the confusion
at the moment

Tokyo Shimbun:
(1)Ozawa's visit to China: Even though he was able to show areas of
contention
(2)Arresting wrong person: There is no excuse


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3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, July 6

NIHON KEIZAI (Page 2) (Full)
July 7, 2006

09:25
Talked on the phone with US President Bush at Kantei, with Foreign
Ministry's Foreign Policy Bureau Director General Kono, Asian and
Oceanian Affairs Bureau Director General Sasae, North American
Affairs Bureau Director General Kawai present.
10:15
Met METI Industry, Technology and Environment Bureau Director
General Koezuka and Environment Ministry's Global Environment Bureau
Director General Kobayashi.
11:03
Met WTO Secretary General Lamy with Ambassador of Japan to the UN
and Other International Organizations in Geneva Fujisaki.
12:00
Met at party headquarters with members of the "Association of
Independent Fresh Lawmakers," Secretary General Takebe, Policy
Research Council Chairman Nakagawa, and Executive Council Chairman
Kyuma.
13:18
Arrived at Kantei.
14:00
Met Special Envoy for Middle East Peace Arima, Deputy Foreign
Minister Nishida, Middle Eastern and African Affairs Bureau Director
General Yoshikawa and others.
15:00
Met Cabinet Intelligence Director Mitani, JDA Defense Bureau
Director General Ofuru, and Defense Intelligence Headquarters chief
Mukunoki. Followed by Economic, Fiscal and Financial Policy Minister
Yosano.
16:03
Met with Foreign Ministry's deputy foreign ministers Nishida and
Yabunaka, Economic Affairs Bureau Director General Ishikawa,
Economic and Industry Deputy Director General Hinoshita, and
others.
17:00
Attended a Fiscal and Economic Reform Council meeting. Later met
with Foreign Vice Minister Yachi.
18:43
Met Deputy Chief Cabinet Secretary Futahashi.
19:00
Met at his official residence with Secretary General Takebe, Upper
House LDP caucus head Aoki.

4) Taepodong missile targeted to reach Hawaii offshore area

SANKEI (Top play) (Full)
July 7, 2006

A long-range Taepodong-2 ballistic missile launched by North Korea
on the morning of July 5 was targeted to hit waters offshore from
Hawaii, Japanese and US government sources revealed yesterday. North
Korea possibly aimed to force the United States to lift its
financial sanctions imposed on it. Meanwhile, the United States has
further hardened its attitude because American territory was
targeted. The US government is expected to intensify international
pressure on North Korea in order for the United Nations Security

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Council to resolve to impose sanctions on North Korea.

The Taepodong-2 missile was fired at 4:59 a.m. on July 5 from
Musudan-ri in North Korea's northeastern district. The missile
stalled after 40 seconds and landed in the Sea of Japan several
hundred kilometers away. According to Japanese and US government
sources, the Defense Agency and US Forces Japan (USFJ) analyzed the
Taepodong-2's path based on data collected by Aegis-equipped ships
and an airborne RC-135S electronic intelligence platform tasked with
tracking ballistic missiles. They concluded that the Taepodong-2
missile had been targeted at a Hawaii offshore area, judging from
its warhead's angle, altitude, and other factors found from their
analysis of data.

Hawaii is situated about 7,000 kilometers away from North Korea. The
Taepodong-2 had been believed to have a range of 3,500-6,000
kilometers. However, its actual range might be considerably longer
than that.

There is no knowing why North Korea had targeted the Taepodong-2
missile at waters near Hawaii. However, one of the government's
informed sources cites some possible reasons: 1) North Korea wanted
to demonstrate that the United States is within range; 2) Hawaii is
where the US Navy's Pacific Fleet headquarters is located; and 3)
the Taepodong-2 missile's targeting accuracy is low, so the missile
could have landed on land if it had been launched in the direction
of Alaska.

5) 2nd Taepodong-2 missile confirmed

SANKEI (Page 1) (Abridged)
July 7, 2006

WASHINGTON- Traffic and other activities are still going on at a
missile test facility in North Korea's northeastern district for
long-range Taepodong-2 ballistic missiles, following its recent
launch of the first Taepodong-2 missile, Japanese and US
intelligence officials confirmed yesterday. North Korea is presumed
to be readying to test-fire another Taepodong-2 missile because the
first one failed. In the meantime, North Korea is also believed to
be making a demonstration with an eye on future negotiations at the
United Nations or elsewhere.

6) Gov't on alert expecting another Taepodong missile launch

NIHON KEIZAI (Top play) (Abridged)
July 7, 2006

The government is now on the alert against North Korea's possible
launch of another long-range Taepodong-2 ballistic missile,
officials said yesterday. The government deems that North Korea
might be making preparations to fire a second long-range ballistic
missile that is believed to be a Taepodong-2 missile. The government
will tighten security at atomic power plants and other vital
facilities at home, as well as the nation's densely populated areas,
in cooperation with local governments. Japan is applying diplomatic
pressure on North Korea with the United Nations Security Council
adopting a resolution denouncing North Korea, in an aim to stop
North Korea from firing a second ballistic missile. In the meantime,
the Self-Defense Forces (SDF) and US Forces Japan (USFJ) have been
intensifying their warning and surveillance activities.


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North Korea has released its foreign ministry's statement claiming
it will continue its missile testing. "Including the missile
launches this time, it is well conceivable that they will take
action," Defense Agency Administrative Deputy Director General
Takemasa Moriya told a press conference yesterday. With this, the
vice defense minister implied that North Korea could fire a second
Taepodong-2 missile.

SDF Joint Staff Chief Hajime Massaki has also ruled out the
possibility of another Taepodong-2 missile launch. "There's no
information to deny it," the top brass officer said. Meanwhile,
North Korea might be assembling another Taepodong-2 missile.
Touching on this possibility, he declared that the SDF would remain
on the alert.

7) Japan, US to jointly propose at G8 summit that chair's statement
express concerns about North Korea's missile launches, call for
freeze

YOMIURI (Top play) (Excerpts)
July 7, 2006

The Group of Eight (G8) industrialized countries summit conference
that will start at St. Petersburg in Russia on July 15 is likely to
express in the G8 chairman's summary statement grave concerns about
North Korea's missile launches and urge that country to exercise
self-restraint. This was confirmed yesterday by some G8 members.
Prime Minister Koizumi and US President Bush will propose the
language at the G8 summit conference for endorsed by other leaders.
A statement on nuclear nonproliferation that the summit conference
will adopt will also urge North Korea to freeze missile-launching
indefinitely and to urge nonproliferation of nuclear weapons and
missiles.

On July 5, Prime Minister Koizumi called Deputy Foreign Minister
Mitoji Yabunaka to the Prime Minister's Official Residence and
instructed him to coordinate views with other countries so that
North Korea's missile launches will be put on agenda for the G8
summit and the chairman's summary statement will clearly mention the
missile issue.

8) Missile launches by North Korea: China, Russia cautious about
slapping sanctions

ASAHI (Top Play) (Lead para.)
July 7, 2006

A North Korean Foreign Ministry spokesman yesterday officially
admitted that the barrage of missile launches was part of its
military training and indicated the nation's intention to continue
missile-launching exercises. Chinese and Russian leaders, who had
showed understanding toward the position of North Korea, made
statements seeking self-restraint from Pyongyang. They also took a
cautious position about the idea of imposing sanctions on the North,
underscoring the difference in their stance from that of Japan and
the US, which are calling for sanctions. Gaps in views on the issue
are now seen among the major countries.

9) Koizumi sends message to North Korea via Indonesia, calling for
it to halt missile launches, return to six-party talks

NIHON KEIZAI (Page 2) (Full)

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July 7, 2006

Taku Yamasaki, a former vice president of the Liberal Democratic
Party, met in Jakarta on July 6 with Indonesian President Susilo
Bambang Yudhoyono, who is scheduled to visit North Korea on July 18.
In the talks, Yamasaki entrusted Yudhoyono with Prime Minister
Junichiro Koizumi's message urging North Korea to halt missile
launches and return swiftly to the six-party talks. In response,
Yudhoyono expressed his eagerness to contribute to Asia's stability.
The Koizumi message stated: (1) Launching missiles was a serious
violation of the Japan-DPRK Pyongyang Declaration, and North Korea
must exercise self-control; and (2) North Korea must swiftly return
to the six-party talks to discuss the nuclear and missile issues.

10) Government to revise Foreign Exchange and Foreign Trade Control
Law to make all military-adaptable North Korea-bound products
subject to trade minister's authorization

YOMIURI (Page 2) (Full)
July 7, 2006

The government decided yesterday to tighten regulations on all North
Korea-bound exports that might be used in the production of weapons
of mass destruction. At present, the economy, trade and industry
minister's approval (kyoka) is required for exporting such products
as computers and telecommunications peripheral devices in excess of
50,000 yen, which can be used for military applications, to North
Korea, Iran, Iraq, and Libya. The government will make products
worth less than 50,000 yen also subject to the minister's
authorization by revising the Foreign Exchange and Foreign Trade
Control Law this fall.

Behind the decision lies the situation where an increasing number of
products priced below 50,000 yen are now military-adaptable.
Code-processing chips used to cost over 50,000 yen, but today they
are being traded for less than 5,000 yen. Last year, there were
12,000 applications for exporting designated products last year, but
none was for North Korea.

11) LDP's hard-liners intend to speed up preparations for
"retaliatory cards" against North Korea

TOKYO SHIMBUN (Page 2) (Excerpts)
July 7, 2006

By Yuji Shinogase

The Liberal Democratic Party's (LDP) simulation team on economic
sanctions against North Korea, chaired by Ichita Yamamoto, a member
of the House of Councilors, gathered together yesterday. In order to
respond to North Korea's missile launches, the group decided to
submit an emergency measures bill intended to impose financial
sanctions on North Korea, such as a full suspension of financial
transactions and a strict application of money laundering
regulations, to the upcoming extraordinary Diet session in the fall
instead of the regular Diet session of next year in order to swiftly
enact the bill.

Chairman Yamamoto stressed the need for Japan to prepare a new set
of "retaliatory cards" against North Korea as quickly as possible,
telling this reporter: "The special measures law banning certain
vessels from entering Japanese ports -- legislation initiated by

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lawmakers -- was enacted in 2004. This law has now enabled Japan to
take economic sanction measures against North Korea in response to
its missile launches. The government is responsible for determining
the details of retaliatory actions, but we in the ruling camp need
to prepare for a 'tool' for retaliation."

The LDP, backed by the simulation team, has prepared such laws aimed
at putting pressure on North Korea as the amendment to the Foreign
Exchange Control Law, the Special Measures Law Banning Specified
Vessels from Entering Japanese Ports, and the North Korea Human
Rights Law. Diet members initiated all these laws. In dealing with
the missile launches, the government has already decided to apply
the special measures law banning certain vessels from entering
Japanese ports to North Korea's vessel Man Gyong Bong-92 and is
considering applying the amendment to the foreign exchange control
law.

In the belief that North Korea will not move unless it is pushed,
the simulation team aims to enact the financial sanction bill. Some
LDP lawmakers take the view that the indirect reason for the
realization of the second Japan-North Korea summit meeting in May
2004 was that the amendment to the foreign exchange control law came
into effect in February of that year. Given this, hard-liners in the
party think that the situation will not make progress unless Japan
takes a tough stand.

12) Prime Minister Koizumi: I'm glad that North Korea did not fire
missiles when I was visiting Presley's mansion

ASAHI (Page 4) (Full)
July 7, 2006

"I'm glad that a Taepodong missile was not fired when I was touring
Presley's mansion," said Koizumi during dinner last night with
Liberal Democratic Party (LDP) Secretary General Tsutomu Takebe and
other officials. One participant said, "Your are lucky." More than
one participant revealed this comment. Koizumi on June 30 visited
Presley's Graceland mansion along with President George W. Bush and
his wife. He was thrilled by his tour of Graceland, singing Elvis'
song and imitating Elvis.

13) Chief Cabinet Secretary Abe: North Korea planned missile
launches to force dialogue with US; Armitage: Launches were North
Korean leader Kim's policy

ASAHI (Page 2) (Full)
July 7, 2006

Referring in a speech yesterday in Tokyo on the aim of North Korea
in test firing its missiles, Chief Cabinet Secretary Shinzo Abe
said, "The common-sense view is that Pyongyang is seeking a dialogue
with Washington." Touching on the fact that most missiles fell into
a certain area, Abe stated: "The missile launches were not
arbitrarily conducted in an uncontrolled manner. They were well
planned." He indicated that the test-fires were carried out under
the control of North Korean leader Kim Jong Il.

Abe also said that the sharing of intelligence between Japan and the
United States has improved compared to 1998, when the North launched
a Taepodong missile. He stressed: "We did not give North Korea any
opening to take advantage of. We have reaffirmed how crucial the
alliance is."

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Former Deputy Secretary of State Richard Armitage, who delivered a
speech before Abe, stated: "Kim Jong Il calculated that Japan and
the US would not be able to add further sanctions, and that China
and Russia would not impose sanctions. This was his method." He then
added: "North Korea will probably launch more missiles. It is not
true that North Korea's military has control; the missile launches
were Kim Jong Il's policy." He denied the view that Kim Jong Il has
lost control of the military.

14) Hatoyama: Reluctance of China, Russia to adopt UN resolution
exposes vulnerability of Koizumi diplomacy

TOKYO SHIMBUN (Page 2) (Full)
July 7, 2006

In a press conference yesterday, Minshuto (Democratic Party of
Japan) Secretary General Yukio Hatoyama denounced Prime Minister
Koizumi's diplomatic stance in reference to the opposition of China
and Russia to adopting a resolution at the United Nations Security
Council calling for sanctions against North Korea for missile
launches. Hatoyama said: "The vulnerability of Japan's pragmatic
foreign policy has been exposed. Japan's relations with Russia and
China have encountered difficulties since the Koizumi administration
was launched. Such circumstances are behind those countries' refusal
to take joint steps with Japan."

Citing that Minshuto head Ichiro Ozawa has exchanged views on North
Korea's missile problem with high-ranking Chinese government
officials in China, Hatoyama commented: "It is impossible to
promptly rectify the weakness of Koizumi diplomacy. Japan and China
are not necessarily taking the same stance."

15) JCP chairman blasts North Korea: Using the threat of armed force
is an unforgivable act

TOKYO SHIMBUN (Page 2) (Excerpts)
July 7, 2006

In the second plenary meeting of the Japanese Communist Party's
(JCP) Central Committee yesterday, JCP Chairman Kazuo Shii lashed
out at North Korea for firing missiles, saying:

"That nation is trying to force its demands by using the threat of
armed force. Such a brinkmanship approach is an unforgivable act
that threatens the peace and stability of Northeast Asia."

Shii urged North Korea to "abide by the international rules and the
Japan-North Korea Pyongyang Declaration."

16) Government to introduce MD system earlier than originally
planned; Nukaga reveals plan to deploy PAC-3 missiles before year's
end

NIHON KEIZAI (Page 2) (Excerpts)
July 7, 2006

In the wake of the launch of a ballistic missile by North Korea, the
government will introduce a missile defense (MD) system to detect
and intercept incoming ballistic missiles ahead of the original
timetable. In cooperation with the US military, the government will
deploy Patriot Advanced Capability-3 (PAC-3) ground-to-air missiles

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before year's end and increase the capability to detect missiles'
trajectories by using electronic surveillance aircraft and radars.

Defense Agency Director General Fukushiro Nukaga, in yesterday's
Lower House Security Committee meeting, announced a plan to begin
deploying PAC-3 missiles before year's end instead of the originally
planned fiscal 2007, to put them into operation gradually.

Envisaging more missile launches by the North, Nukaga said: "In
collaboration with the United States, we want to build a missile
intercept system and surveillance radar networks as early as
possible."

The PAC-3-centered MD system is designed to detect and intercept
enemy ballistic missiles before the terminal phase. More
specifically, it is designed to intercept missiles flying outside
the atmosphere with sea-based Standard Missile-3 interceptors and
missed targets with ground-based PAC-3 missiles.

The US military plans to deploy PAC-3 missiles first at its Kadena
Air Base in Okinawa. Coinciding with the US plan, the Air
Self-Defense Force intends to gradually deploy PAC-3 missiles at its
Iruma base in Saitama, Hamamatsu base in Shizuoka, and other bases.

17) Chief Cabinet Secretary Abe proposes strategic dialogue among
US, Australia, India, Japan at Yomiuri Shimbun symposium

YOMIURI (Page 1) (Excerpt)
July 7, 2006

In a speech yesterday at a special session of the Yomiuri
International Economic Symposium (YIES) held at the Tokyo Kaikan
Hall at Marunouchi, Tokyo, Chief Cabinet Secretary Abe spoke of
Japan's Asia diplomacy and proposed a four-party dialogue concept
involving Japan, the United States, Australia, and India, saying:
"India is a country that shares such values as freedom, democracy,
and human rights. I think it is a good idea to create a forum for
Japan, the US, Australia, and India to hold strategic
consultations." Abe made this proposal, apparently having in mind a
growing call to emphasize diplomacy toward Asia ahead of the Liberal
Democratic Party's presidential election in September.

18) Minshuto head Ozawa meets with likely successor to President Hu
in China

TOKYO SHIMBUN (Page 2) (Excerpts)
July 7, 2006

Shohei Yoshida, Shenyang

Minshuto (Democratic Party of Japan) President Ichiro Ozawa,
currently in China, visited Shenyang, the capital of Liaoning
Province, on the afternoon of July 6 where he met with Chinese
Communist Party Liaoning Province Committee General Secretary Li
Keqiang at the State Guest House. Li is viewed as a likely candidate
to succeed President Hu Jintao.

Li was born in 1955 and comes from the Chinese Communist Youth
Organization, like Hu. When he visited Japan in 1992 as a member of
the youth organization, he stayed Ozawa's home in Iwate Prefecture.

In the meeting with Ozawa, Li expressed eagerness to develop trade

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between Japan and Liaoning Province, which has a flourishing heavy
industry. Ozawa replied: "I am happy to see my old friend attain
greatness (as a senior member of the Chinese Communist Party).

19) LDP's Koga wants Yasukuni Shrine to be secular facility

ASAHI (Page 4) (Full)
July 7, 2006

Former Liberal Democratic Party (LDP) Secretary General Makoto Koga,
chairman of the Japan Association of the Bereaved Families of the
War Dead, stated yesterday in a meeting of the Niwa-Koga faction in
the LDP:

"I want to move ahead with debate on Yasukuni Shrine, including the
possibility of building a facility unconnected with any religious
faith, and whether the state will sponsor such a secular facility."

Koga has proposed a study of disenshrinement of Class-A war
criminals from Yasukuni Shrine. He also suggested in his remarks
that Yasukuni Shrine be a secular facility under state control.

Koga said: "Debate on Yasukuni Shrine have been conducted at a
faster pace than I expected. I am not budging on my view that
Yasukuni should be the only war memorial in Japan." He sought to
check the views in the LDP that a national war memorial should be
built and that the Chidorigafuchi war memorial should be expanded.

20) Outlook for real economic growth rate for this fiscal year to be
upgraded to 2.1 PERCENT ; Government certain of economy's emergence
from deflationary period

NIHON KEIZAI (Page 1) (Excerpts)
July 7, 2006

The Cabinet Office yesterday decided to revise upward the outlook
for the economic growth rate for fiscal 2006 to 2.1 PERCENT in real
terms, which excludes the impact of fluctuations in prices, and to
2.2 PERCENT in nominal terms, up 0.2 points respectively from the
government outlook adopted by the cabinet in January.

The Cabinet Office will present the revised figures to the Council
on Economic and Fiscal Policy, which is to meet today. From now on,
these figures will become the government's official outlook for
economic growth.

The revised growth rate in nominal terms will top the revised real
growth rate for the first time in nine years, as it did in the
original outlook. Having stood firm on the initial outlook for six
months ago, the government will come up with a view that the
Japanese economy will definitely emerge from the deflationary spiral
before the end of the year. The Cabinet Office's presumption that
the economy will emerge from the deflationary period will set
another condition for the Bank of Japan to lift its zero interest
rate policy.

SCHIEFFER