DAILY SUMMARY OF JAPANESE PRESS 07/10/06

UNCLAS SECTION 01 OF 06 TOKYO 003835

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SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 07/10/06
Part-2
INDEX:
(6) Urasoe presents a letter of appreciation to Consul General
Reich for his efforts to promote mutual understanding with the US


(7) "Koizumi's children": 37 new LDP lawmakers belonging to no
faction to experience LDP presidential election for first time

(8) Political significance of deployment of SDF troops in Iraq

(9) LDP's Yamasaki visits Indonesia along with 4 lawmakers who
rebelled against the LDP in the vote on postal bills last year

(10) Future of consumption tax remains unclear in economic and
fiscal policy guidelines; Government urged to discuss consumption
tax hike

ARTICLES:
(6) Urasoe presents a letter of appreciation to Consul General
Reich for his efforts to promote mutual understanding with the US

OKINAWA TIMES (Page 16) (Full)
July 10, 2006

Urasoe - Urasoe Mayor Mitsuo Gima has presented US Consul General
for Okinawa Thomas G. Reich, 36, with a letter of appreciation for
his contribution to the mutual understanding between the city and
the United States, as evidenced by the establishment of American
Corners at the Urasoe City Public Library. Reich is scheduled to
leave Okinawa on July 12.

At the presentation ceremony held at the library, Gima said: "We
will advance international understanding by utilizing the American
Corners. Although Mr. Reich will leave his post, we hope you will
return to Japan as ambassador." The mayor handed a letter of
appreciation to Reich and a bouquet to his wife Seiko, 26, a native
of Naha City.

Reich thanked Gima, saying: "We were able to do a variety of
projects to deepen mutual understanding. I am looking forward to
exchanges with the mayor when I come back to Okinawa."

Since assuming office in September 2003, Reich played a central role
in establishing the very first American Corners in Japan in the
city's library in September 2004, donating materials on American
history and culture and CDs. He also made tremendous efforts in
hosting concerts at elementary and junior high schools in the city
by inviting professional musicians. After leaving Japan on July 12,
Reich will take on a position responsible for congressional affairs
in the US State Department's Bureau of East Asian and Pacific
Affairs.

(7) "Koizumi's children": 37 new LDP lawmakers belonging to no
faction to experience LDP presidential election for first time

TOKYO SHIMBUN (Page 2) (Abridged slightly)
July 9, 2006

It has been about 10 months since 82 candidates on the Liberal
Democratic Party ticket were elected last September to their first
term in the House of Representatives. Having received their baptism
into politics, about a half of them have joined factions.
Differences have appeared in their political visions. For better or
worse, they once ran as a team, but are now gradually acting

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Part-2
INDEX:
(6) Urasoe presents a letter of appreciation to Consul General
Reich for his efforts to promote mutual understanding with the US

separately. They will see for the first time political change with
the September LDP presidential election.

At noon on July 6 at LDP headquarters, 28 new lawmakers held a
meeting with Prime Minister Junichiro Koizumi and the LDP
executives, including Secretary General Tsutomu Takebe. The 28 are
members of a group of new lawmakers who do not belong to any
faction. Of the 82 "Koizumi's children," 37 members have declared
that they will not join any faction and have formed this new group.
On June 16 the group submitted to Takebe an appeal calling for
reform of the party, including elimination of harmful factional
effects.

While eating a dish of curry, Prime Minister Koizumi jokingly said
in the meeting, "Don't you think that there is no need to join a
faction just because you were invited to dinner and attended
factional meetings?" The "children" concentrated their attention on
what the prime minister was talking about. Some LDP members have
cynically called the group, the "Koizumi faction."

The July 6 meeting was not the first one for Koizumi and freshman
lawmakers. When the first study session was held on Sept. 20, 2005,
a total of 78 new lawmakers took part. Although the number of
participants has decreased to less than a half of the 78 original
members, these are the real "Koizumi's children."

How will the group of new lawmakers with no factional allegiance
respond to the September LDP presidential election? Of course, the
group is not required to support a single candidate of one mind
since it is not an existing faction. Jiro Ono, secretary general of
the group and former secretary to Koizumi, said: "No individual
names have been mentioned, but there is a possibility that the group
will support a certain candidate."

Many assume that the group will support Chief Cabinet Secretary
Shinzo Abe, who is enthusiastic about reform of the party and is
like an elder brother to the new lawmakers. And Koizumi is believed
to back Abe.

"Koizumi's children" have a sense of values that are different from
the LDP's stereotypical views. So, they may make an unthinkable
decision. The 37-member group is the fourth largest in the LDP next
to the Niwa-Koga faction, which is followed by the Mori and Tsushima
factions. The presidential candidates desperately want their
support. Post-Koizumi contenders might start making daily visits to
court "Koizumi's children."

(8) Political significance of deployment of SDF troops in Iraq

ASAHI (Page 15) (Full)
July 8, 2006

By Hiroshi Nakanishi, professor of international political science
at Kyoto University

The pullout of Ground Self-Defense Force (GSDF) troops from Samawah,
Iraq, will be completed shortly. Even after the withdrawal, the
Japanese government will continue reconstruction assistance to Iraq,
for instance, through Air Self-Defense Force (ASDF) operations or by

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INDEX:
(6) Urasoe presents a letter of appreciation to Consul General
Reich for his efforts to promote mutual understanding with the US

providing official development assistance. I think that now is an
appropriate time to evaluate Japan's reconstruction assistance,
taking advantage of the pullout.

The evaluation can be made from two viewpoints. First, what was the
impact of GSDF activities in Iraq? Next, what was the political
effect of the GSDF deployment to that country?

My answer to the first question is that the dispatched GSDF troops
did their best, despite the restrictions on what they were allowed
to do in the local area. They brought the water supply back to
normal and repaired hospitals, schools, and other facilities. Based
on news reports, their activities appear to have been appreciated by
local residents. On the other hand, there has been criticism that
private firms or nongovernmental organizations (NGOs) would have
been better than GSDF troops in terms of cost effectiveness.

Given the security situation in the local area, however, it was
difficult for Japanese companies or NGOs to work in and around
Samawah. Even though that area has been generally quiet, terrorists
targeting foreigners were present. If terrorists had targeted
Japanese engaged in reconstruction activities, Tokyo would have had
no choice but to halt everything. But because of the GSDF's
capability of defending itself, the troops were better able to
handle official assistance activities in Iraq.

However, even though the dispatched GSDF troops might have done
their utmost, their achievements remained limited, given the overall
demand for reconstruction across Iraq. I therefore think that the
dispatched GSDF troops instead played a political role and served as
a political symbol. In this sense the cost effectiveness of the
troop dispatch was significant.

The decision to dispatch SDF troops to Iraq was burdened with two
somewhat contradictory goals desired by the Japanese public: a
pacifist view that Japan should never let its troops use armed force
abroad, and desire to win praise as a country contributing to world
peace.

Perhaps in order to meet those contradictory goals or other reason,
SDF troops tended to stay in camp to reduce the risk of having to
use armed force. As a result, they are expected to return home
safely and without injuring one single Iraqi. This can be seen as a
significant achievement, given the current situation.

In addition, the troop dispatch helped Japan enhance its presence in
Iraq and the rest of the Middle East as well as improve its image in
the region, bolstered by the troop dispatch, as well as to fulfill
America's expectations, Japan's ally.

Although some Iraqis and some Middle Eastern countries criticized
Japan for its troop dispatch, the criticism came in a sporadic way.
Japan has been able to obtain a certain degree of understanding from
neighboring Arab states toward its desire to contribute to peace
building in the Middle East. Given that the Bush administration has
greatly appreciated Prime Minister Koizumi's decision to dispatch
troops to Iraq and has given strong backing to the prime minister,
it is safe to say that Japan's troop dispatch this time was
successful. A total of only 5,000 troops were dispatched to Iraq,

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(6) Urasoe presents a letter of appreciation to Consul General
Reich for his efforts to promote mutual understanding with the US

but their political effect was very significant indeed.

Even so, Japan should not be simply be satisfied with the dispatch
as a success story. There are a number of questions needed to be
examined, for instance, how best to work together among the SDF,
other ministries and agencies, and the private sector, and what to
do about the right to collective self-defense, which stands in the
way for Japan to work in closer cooperation with other countries.
For future contributions to peace building, Japan needs to closely
examine the experience it had this time, for doing so will lead to
responding to the wishes of the six civilian Japanese killed in
Iraq.

(9) LDP's Yamasaki visits Indonesia along with 4 lawmakers who
rebelled against the LDP in the vote on postal bills last year

YOMIURI (Page 4) (Full)
July 10, 2006

Taku Yamasaki, a former vice president of the Liberal Democratic
Party (LDP),returned home on July 8 from Indonesia. He visited that
country along with four independent House of Representatives members
who had left the LDP after voting against the government's
postal-privatization bills in last year's regular Diet session. Some
observers think that Yamasaki may have let them join his trip to
Indonesia with an eye on their being reinstated in the LDP after the
party presidential election in September.

The Lower House members accompanied Yamasaki were Masahiro Imamura
(Saga No. 2 constituency),Yoshihisa Furukawa (Miyazaki No. 3),
Hiroshi Moriyama (Kagoshima No. 5),and Ryota Takeda (Fukuoka No.
11). All four come from the Kyushu region from where Yamasaki also
hails.

Asked by reporters on July 7 in Indonesia about the reason for
letting the four accompany him, Yamasaki responded, "Because I have
enjoyed relationships of trust with them. However, we had neither
political nor strategic purpose." Regarding the possibility of their
rejoining the LDP, Yamasaki said: "As long as Prime Minister Koizumi
is in office, I cannot ask them to rejoin the party since the prime
minister has a different view."

The dominant view in the LDP is that cooperation with the
anti-postal lawmakers is necessary for next summer's House of
Councillors election.

At a party hosted by Hisaoki Kamei, a senior member of the People's
New Party, on July 7 in Shimane Prefecture, Mikio Aoki, chairman of
the LDP caucus in the Upper House, expressed strong expectations for
Kamei's return to the LDP. The vote-drawing power of Imamura and
others, who defeated the LDP "assassin "candidates in last year's
Lower House election, makes them attractive to the LDP.

Yamasaki suggested in February that the LDP take relief measures
under the Koizumi government. He has held study sessions with
independent lawmakers coming from the Kyushu region.

Some LDP members see that Yamasaki has made such moves with an eye
on the LDP after the presidential election. He was believed to favor

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(6) Urasoe presents a letter of appreciation to Consul General
Reich for his efforts to promote mutual understanding with the US

former Chief Cabinet Secretary Yasuo Fukuda in the upcoming
presidential race, but he is now skeptical about the candidacy of
Fukuda. Some believe Yamasaki has a hidden motive of wanting to
expand his own influence in the party by scoring points with party
outcasts with the presidential election after next in mind.

Among the rebels, some are considering forming a new party to
receive government subsidies distributed to political parties if
there is no prospect of their being able to rejoin the LDP before
the end of this year.

One lawmaker who accompanied Yamasaki to Indonesia said: "If I
cannot return to the LDP before the next Upper House election, my
supporters will never back the LDP."

(10) Future of consumption tax remains unclear in economic and
fiscal policy guidelines; Government urged to discuss consumption
tax hike

YOMIURI (Page 2) (Full)
July 8, 2006

The government adopted its annual policy guidelines on economic and
fiscal management and structural reforms during a cabinet meeting
yesterday. The guidelines stress the need to look into incorporating
revenues from the consumption tax into the social security budget,
reflecting increased social welfare spending due to the falling
birthrate and the aging population. But with neither a specific
margin of tax increase nor a timeframe for implementation mentioned,
the policy guidelines do nothing to help eliminate uncertainties
over the future of the social security system.

The inclusion of a proposal to use consumption tax revenue as a
social security funding resource is a step forward. Although some
have been calling for postponing the reform of the tax system, the
guidelines state specifically: "The government in FY2007 will
drastically reform the tax system, including the consumption tax."
Regarding the level of the consumption tax itself, however, the
future course remains uncertain.

The government intends to return the primary balance into the black
in FY2011. Even if it achieves this goal, though, the government
will have to continue to issue government bonds in order to pay
interest and principle for its past debt, and the central and local
governments' outstanding long-term loans worth about 770 trillion
yen (as of the end of FY2005) will increase. Social security
spending will skyrocket around 2015, when many in the baby-boomer
generation will start receiving pension benefits.

The government will discuss measures to raise the self-payment share
of nursing-care insurance premiums from the current 10 PERCENT to
20 PERCENT , as well as to introduce a system designed to deduct a
certain amount of medical fees from insurance coverage. Such
measures will be painful for the public to bear, so fierce reactions
are expected.

Under the newly adopted guidelines, specific measures will be
entrusted to the next administration. The new government will aim at
completing the reconstruction of the nation's fiscal system by

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(6) Urasoe presents a letter of appreciation to Consul General
Reich for his efforts to promote mutual understanding with the US

around 2015. A senior official of the Liberal Democratic Party's Tax
System Research Commission said: "The margin of increase will not be
just 1 PERCENT to 2 PERCENT ." Keeping such a possibility in mind,
the government must first fully explain the necessity of raising the
consumption tax rate and then speed up discussion on tax system
reform.

Reforms might be watered down

The policy guidelines, which will be the last one for the Koizumi
administration to issue, set a timetable for spending cuts covering
the next five years, as part of efforts to create small government.
Some claim, though, that reform plans were watered down because the
LDP had taken the lead.

After the cabinet meeting yesterday, Prime Minister Koizumi
emphasized the significance of the package, remarking: "It is
epoch-making for the ruling coalition to cooperate in slashing
expenditures to this extent." Policy Research Council Chairman
Nakagawa also stated: "Since the LDP was involved in making the
decision, the new government will resolutely trim expenditures, no
matter who succeeds Prime Minister Koizumi."

But House of Councillors Secretary General Katayama and others,
afraid of the negative impact on the next Upper House election,
strongly opposed spending cuts for local governments. As a result,
the package proposed that the current levels should be kept for the
central government's grants to local governments. As for public
works spending, as well, the proposed annual 3 PERCENT cut from the
level a year earlier was constrained to a 1-3 PERCENT cut. In an
advisory panel meeting yesterday, private-sector members, concerned
about a deceleration of the reform drive, presented a package of
recommendations for next fiscal year's budget that call for strict
budgetary request guidelines to continue the reform efforts made so
far.

Some critics charge that the policy decision process has become
non-transparent. In working out annual economic and fiscal policy
guidelines, discussion was conducted mainly at the Council on
Economic and Fiscal Policy. The panel has made its conference
minutes public to show the process of unifying views to the public.
In contrast, the details of discussions conducted by Policy Research
Council Chairman Nakagawa and the project team under the Upper House
were closed to the public.

In a press conference yesterday, Chief Cabinet Secretary Abe
stressed the need to make the process more transparent, saying: "How
to secure transparency remains an issue to tackle. Some persons have
pointed out that discussions in the party were non-transparent."

SCHIEFFER