JAPANESE MORNING PRESS HIGHLIGHTS 07/13/06

UNCLAS SECTION 01 OF 06 TOKYO 003910

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SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 07/13/06
Part-2
Index:
11) Major South Korean daily blasts President Roh, calls on him to
spend more time worrying about North Korea than criticizing Japan


12) Minshuto President Ozawa states categorically that North Korea
will not attack Japan

13) Abe denies ever mentioning "preemptive strike" option in his
statements

14) Announcements by prime ministerial contenders of their
candidacies may slip to after August 15

15) New Komeito to delay presentation of its additions to
Constitution

16) Minshuto to go on the offensive in Okinawa to capture future
votes

17)Bank of Japan zero-rate interest rate policy to end tomorrow

ARTICLES:
11) North Korean missiles: South Korean dailies urge Roh
administration to warn North Korea instead of criticizing Japan

TOKYO SHIMBUN (Page 6) (Full)
July 13, 2006

Seoul, Yuji Yamamoto

South Korea's Roh Moo Hyun administration blasted Japanese officials
for raising the idea of preemptive attacks on missile bases in North
Korea. Major South Korean dailies yesterday carried editorials
urging the Roh administration to warn Pyongyang instead of
criticizing Japan.

The Chosun Ilbo wrote, "The South Korean government is strongly
concerned over a possible military build up by Japan, but it was
North Korea's nuclear arms and missiles that gave Japan the excuse
for raising the idea." It then criticized the delay in the
administration's response, noting, "There was an easygoing
atmosphere in the South Korean government concerning the missile
launches by Pyongyang."

The Joong Ang Ilbo pointed out that the argument made by some
influential Japanese politicians for attacking North Korea was a
preposterous, because if such an attack would turn the Korean
Peninsula into a battlefield. However, it also criticized the Roh
administration, saying, "The problem is that it was slow to respond
to North Korea's missile launches, which have threatened our
security, while Japan has immediately come up with this hard-line
stance."

The Dong A Ilbo wrote: "South Korea is facing a difficult decision.
What is the benefit of letting the missile friction between Tokyo
and Pyongyang sparking confrontation between Seoul and Tokyo?"

12) Minshuto head Ozawa: North Korea will not attack Japan

NIHON KEIZAI (Page 2) (Full)
July 13, 2006


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SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 07/13/06
Part-2
Index:
11) Major South Korean daily blasts President Roh, calls on him to
spend more time worrying about North Korea than criticizing Japan

Appearing on a TV Asahi program last night, Minshuto (Democratic
Party of Japan) President Ichiro Ozawa said: "Although North Korea
is using brinksmanship as a political tool, it will never wage war
and attack another country." Asked whether he would cooperate with
the government to resolve the issue, he stressed: "The person who
holds the reins of government should fulfill that responsibility. If
he cannot do so, he should resign."

Asked about how he thought the United States would respond, Ozawa
responded: "The US has no intention to fight against North Korea and
China. In order to bring about democracy to North Korea, it is
absolutely necessary for the US to cooperate with China."

13) Enemy base strike argument creates stir in gov't, ruling
coalition: Abe denies calling for preemptive strike, Yamasaki calls
concept "outrageous"

ASAHI (Page 2) (Full)
July 13, 2006

Chief Cabinet Secretary Abe defended his recent remark suggesting
the need to study the capability of striking enemy bases in response
to North Korea's July 5 firing of missiles. "I said we would need to
study it premised on the case in which Japan came under attack," Abe
said yesterday. "No one is saying we should strike first," he
added.

Abe was replying to a question in a press conference yesterday. In
South Korea, President Roh Moo Hyun called Abe's enemy base strike
remark a "preemptive strike." Abe rebutted such reactions at home
and abroad to his remark.

"Some critics sound as if to say Japan would invoke the right of
self-defense before another country has yet to carry out an armed
attack," Abe said. "But," he went on, "that's totally incorrect." He
added, "They're striking the air with a stick though there's nothing
there." With this, Abe underscored his position that Japan may be
allowed to strike an enemy base after an enemy country initiated an
attack (chakushu) on Japan.

Abe also admitted to the difficulty of determining when the enemy
was initiating an attack Japan. "It is of course highly likely after
a missile has landed and caused damage," Abe said.

However, Abe noted the necessity of discussing whether Japan should
acquire the capability of striking an enemy base.

"We have our respective roles to play-Japan as a shield (on the
defensive) and the United States as a spearhead (on the
offensive)-in order for the two countries to act in concert to deal
with an attack, so we need to study our best combination at all
times," Abe explained.

In the meantime, Taku Yamasaki, chairman of the ruling Liberal
Democratic Party's security affairs panel, warned strongly of Abe's
advocacy of discussing whether to acquire the capability of striking
enemy bases. "It's a highly outrageous argument," Yamasaki said in a
speech he delivered yesterday in the city of Osaka. He also said,

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SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 07/13/06
Part-2
Index:
11) Major South Korean daily blasts President Roh, calls on him to
spend more time worrying about North Korea than criticizing Japan

"It runs counter to Japan's defense-only posture, and it's a serious
breach of the Constitution." He added, "Government officials in
charge of foreign and security policies should refrain from saying
things like that."

Yamasaki went on: "New Komeito President Kanzaki said, 'It could
develop into an all-out war.' That's correct. The people would think
of it as pounding an attack-launching base, so it has very risky
factors. It's dangerous like the prewar mood for doing whatever we
pleased."

14) Prospective LDP presidential candidates likely to announce their
candidacies after August 15

TOKYO SHIMBUN (Page 2) (Excerpts)
July 13, 2006

Although the LDP presidential election in September is less than two
months away, prospective candidates, such as Taro Aso, Sadakazu
Tanigaki, Yasuo Fukuda, and Shinzo Abe, have yet to clearly announce
their candidacies. A full-fledged post-Koizumi race was expected to
start to coincide with the end of the last Diet session on June 18.
But that did not happen. Candidates are not likely to come forward
until at least mid-August.

In late May, Chief Cabinet Secretary Shinzo Abe, the front-runner in
various opinion polls, indicated that he would announce his
candidacy after the St. Petersburg G8 summit to start July 15. But
since the end of the last Diet session, he has been leaning toward
doing so in mid-August or later.

A person close to Abe explained: "The presidential race is not
heating up because hardly any lawmaker is in Tokyo while the Diet is
in recess." Former Chief Cabinet Secretary Yasuo Fukuda, a popular
figure among anti-Abe forces, has been mum about entering the
presidential race. This is apparently affecting Abe's attitude.

Former defense chief Seishiro Eto, a supporter of Fukuda, urged
Fukuda to throw his hat in the ring, saying, "It will take two
months for you to let the people know your policies. That means you
have to announce your candidacy no later than late July." Still,
Fukuda has remained silent.

Many LDP members believe that Fukuda will make up his mind after
watching whether or not Prime Minister Koizumi will visit Yasukuni
Shrine on August 15. They think Koizumi's shrine visit would result
in greater Asia-policy expectations of Fukuda, who is critical of
such visits.

Regardless of his intentions, Fukuda by remaining silent has turned
August 15 into a major landmark day in the presidential race.

Meanwhile, Abe, a supporter of Koizumi's shrine visits, seems to
have judged that it would not be too late to announce his candidacy
after watching whether Koizumi would pay homage at Yasukuni on
August 15 and what Fukuda's course of action would then be.

Tanigaki having hard time in obtaining endorsements

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SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 07/13/06
Part-2
Index:
11) Major South Korean daily blasts President Roh, calls on him to
spend more time worrying about North Korea than criticizing Japan


Overshadowed by the tug-of-war between Abe and Fukuda, Foreign
Minister Taro Aso and Finance Minister Sadakazu Tanigaki are highly
alarmed. But they have yet to determine the timing of announcements
of their candidacies, either.

In a meeting on July 6 of executive members of the Tanigaki faction,
many urged Tanigaki to formally run in the race in July ahead of Abe
and Fukuda. In response, Tanigaki said, "I will follow your
advice."

15) New Komeito to delay adoption of its own constitutional reform
proposal to September or after

YOMIURI (Page 4) (Excerpts)
July 13, 2006

The New Komeito decided yesterday in a meeting of its Constitutional
Research Council not to adopt its own constitutional reform draft
proposal, which calls for adding new articles in the present
Constitution, even though the party had planned to adopt it at its
convention on Sept. 30. As a result, the party has put off the
adoption of its own constitutional reform proposal. The decision was
made because the Diet had decided at the recent regular session to
carry a national referendum bill that would set procedures for
amending the Constitution over to the next session. The New
Komeito's decision to delay the work might affect constitutional
debates in other political parties.

Constitutional Research Council Chairman Akihiro Ota told reporters,
"A majority of our party members wanted to continue cautious and
in-depth discussion."

Ota revealed that he would announce at the convention only items and
themes to be added to a draft proposal and that the draft proposal
would include: (1) the first paragraph of Article 9 should be
retained; (2) environment rights, privacy right, the right to
receive lifelong study, and the human rights of foreigners should be
added; and (3) authorities of local governments should be made
clear. He also unveiled that his party would formulate its own
constitutional reform draft after the fall extraordinary Diet
session, saying, "The prospect would be passage of the national
referendum bill."

Ota announced at the party's convention last November that the
party's own constitutional reform draft proposal would be compiled
in September 2006. It was thought that the constitutional reform
draft to be formulated by Ota, the most likely candidate to become
the next party head, would become a showcase of the September party
convention.

Since the constitutional referendum bill has been carried over to
the next session, a cautious view grew in the party. "It is not a
good timing for the party to adopt a constitutional reform draft
proposal while discussion on procedures for amending the
Constitution are going on," said party head Takenori Kanzaki.

16) Minshuto to take aggressive approach to Okinawa; National

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SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 07/13/06
Part-2
Index:
11) Major South Korean daily blasts President Roh, calls on him to
spend more time worrying about North Korea than criticizing Japan

secretaries general meeting tomorrow; Security policy holds the key

SIPDIS

ASAHI (Page 4) (Abridged)
July 13, 2006

Minshuto (Democratic Party of Japan) will hold a national meeting of
local secretaries general and election campaign managers in Naha
City tomorrow to strengthen party unity for next year's Upper House
and unified local elections. The party picked Okinawa to host the
meeting outside Tokyo for the first time, thinking the prefecture
will draw much attention among all single-seat constituencies, which
hold the key to a victory in the Upper House election in terms of
security policy and a possible united front of the opposition camp.
Whether or not Minshuto can send a strong message on security
policy, the party's weakest point, remains to be seen.

Minshuto President Ichiro Ozawa in a press conference on July 11
highlighted the significance of holding the national secretaries
general meeting in Okinawa, saying: "It's a tough challenge to win
the support of the Okinawa public for the Upper House election next
year." At present, Minshuto has no lawmaker elected from Okinawa.
Okinawa residents are not necessarily happy with the Liberal
Democratic Party's policy on US force realignment. Minshuto has
decided that this is a golden opportunity to take an aggressive
approach to wrest Okinawa's seat from the LDP.

But in order to achieve a victory in the Upper House election in
Okinawa, Minshuto needs to join hands with other opposition parties.
The gubernatorial election in November could serve as a test case.

The party is now searching for ways to join forces with the Japanese
Communist Party, the Social Democratic Party, Jiyu Rengo, the
Okinawa Social Mass Party, and local political group Sozo.

Minshuto's bid depends largely on whether it can reach a common view
with those parties on the plan to relocate Futenma Air Station to
Cape Henoko in Nago.

Through their talks in late June, Ozawa, his deputy Naoto Kan, and
Secretary General Yukio Hatoyama confirmed the party's policy course

SIPDIS
to quickly assemble a unified view on US force realignment. Days
after the talks, Ozawa and Hatoyama listened in Tokyo to the views
of National Graduate Institute for Policy Studies Professor Akikazu
Hashimoto, an expert on the Okinawa base issue. Hashimoto advised
Minshuto to have its own diplomatic and security policy line.

But work has not been smooth. In compiling the party's Okinawa
vision last summer, Minshuto originally planned to call for
relocating Futenma Air Station out of Japan, but ended up with
"removing it from Okinawa." But since Tokyo and Washington reached
an agreement, the Minshuto leadership has not presented any clear
view on the Henoko relocation plan, with many members, especially
junior lawmakers, taking relocating Futenma Air Station outside
Okinawa as a pipe dream. Minshuto lawmakers responsible for security
policy are visibly at a loss, saying, "In order for us to discuss
the matter, the leadership must show us a clear direction."

17) BOJ to lift zero interest rate policy tomorrow, determining

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SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 07/13/06
Part-2
Index:
11) Major South Korean daily blasts President Roh, calls on him to
spend more time worrying about North Korea than criticizing Japan

economy is expanding: Guidance target to be set at 0.25 PERCENT

NIHON KEIZAI (Top Play) (Excerpts)
July 13, 2006

The Bank of Japan (BOJ) will likely lift at a policy-setting meeting
starting on July 13 its zero interest rate policy on short-term
interest rates. Nine panel members with the right to vote have
determined that the economy is expanding in a sustainable manner and
that the basic trend of prices is in positive territory, and they
are now inclined to end the policy. The panel will decide to raise
the guidance target for short-term interest rates from the current 0
PERCENT to 0.25 PERCENT a year by majority vote at tomorrow's
meeting. The interest rate in the short-term financial market will
be raised for the first time in five years and four months.

Coordination underway to set official discount rate between 0.4
PERCENT and 0.5 PERCENT

Among various interest rates, which the BOJ is responsible for
raising or lowering in implementing financial policy, the most
important interest rate is the unsecured overnight call rate. It
will set a new guidance target for this interest rate at 0.25
PERCENT a year, followed by a hike in the current official discount
rate of 0.1 PERCENT.

Major points in BOJ's financial policy change

-- Lifting the zero interest rate policy and raising the guidance
target for the unsecured overnight call rate to 0.25 PERCENT
-- Announcing a decision to make the pace of additional interest
hikes moderate
-- Raising the official discount rate from the current 0.1 PERCENT
and undertaking coordination for the new rate between 0.4 PERCENT
and 0.5 PERCENT .
-- Maintaining the present amount of 1.2 trillion yen for the
purchases of long-term government bonds.
-- Changing its judgment on the present state of the economy from
steady recovery to expansion.

SCHIEFFER