DAILY SUMMARY OF JAPANESE PRESS 07/10/06

UNCLAS SECTION 01 OF 06 TOKYO 003835 SIPDIS SIPDIS DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST DIVISION; TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS OFFICE; SECDEF FOR JCS-J-5/JAPAN, DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR; CINCPAC FLT/PA/ COMNAVFORJAPAN/PA. E.O. 12958: N/A TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA 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 TOKYO 00003835 002 OF 006 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 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 TOKYO 00003835 003 OF 006 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 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, TOKYO 00003835 004 OF 006 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 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 TOKYO 00003835 005 OF 006 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 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 TOKYO 00003835 006 OF 006 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 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