JAPANESE MORNING PRESS HIGHLIGHTS 07/14/06

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SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 07/14/06


Index:
1) Top headlines

2) Editorials

3) Prime Minister's daily schedule

4) Government may revise its draft UNSC resolution on North Korea
sanctions to remove mention of Chapter 7 of UN Charter

5) Chief Cabinet Secretary Abe meets famous US scholar Robert
Scalapino, who met Kim Jong Il recently in Pyongyang

6) Minshuto's Ozawa: US has removed the ladder from Japan on the
sanctions

7) Prime Minister Koizumi in meeting with President Abbas pledges
$30 million in aid for Palestinians

8) Koizumi, planning independent diplomacy for his Middle East trip,
miscalculates, arriving to find region at height of new tensions

9) Prime Minister Koizumi, experiencing how difficult it is to
promote peace, finds his Middle East 4-party initiative stalled
before it launches

10) Foreign Ministry establishes new South Asia desk to strengthen
diplomacy toward India

11) PAC-3 missiles to be deployed by US to Kadena as early as next
month

12) US, Japan agree to partial return of Kadena AIR Base: ammunition
dump

13) LDP's Yamasaki in Okinawa calls for strengthening ties between
US forces, Self-Defense Forces

14) Finance Minister Tanigaki, prime ministerial contender, weighs
in on strike capability debate with a cautious view

15) Minshuto (Democratic Party of Japan) to look into unified party
view of USFJ realignment agreement

16) Tokyo court awards plaintiffs record 4 billion yen compensation
for Atsugi base noise

17) Japan, India agree to start FTA negotiations

18) Japan-Malaysia FTA is now in effect

19) Japan, Russia to agree to promote construction of E. Siberia gas
pipeline

-- There will be no Morning Highlights on July 17 - a Japanese
holiday.

Articles:
1) TOP HEADLINES
Asahi and Sankei:
Government mulls modifying UNSC draft resolution on North Korea,
eliminating reference to Chapter VII following counterproposal by

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China and Russia

Mainichi:
Suspect in murder of Akita boy tells police her daughter, earlier
found dead in river, fell from bridge

Yomiuri:
Japan to accept removal of Chapter VII provisions in UNSC draft
resolution on North Korea

Nihon Keizai:
Internal Affairs and Communications Ministry plans to allow up to 42
channels to be added for satellite broadcasts

Tokyo Shimbun:
Bank of Japan to lift zero-interest-rate policy today

2) EDITORIALS
Asahi:
(1)Time to adopt unified UNSC resolution against North Korea
(2)Urgent need for drastic measures for base noise

Mainichi:
(1)China-Russia draft resolution against North Korea must be
effective
(2)World Cup: Verbal violence on the pitch detected through Zidane's
head-butting (by Akitaka Nakajima, editorial committee member)

Yomiuri:
(1)China-Russia resolution too soft on North Korea
(2)Recording of prosecutor questioning is first step for
easy-to-understand trials

Nihon Keizai:
(1)Treats of nuclear weapons and missiles to test G-8 unity
(2)Doubt about large amount of capital increase in JAL

Sankei:
(1)Japan should contribute to Middle East peace on its own way
(2)Giving up on lawsuit is shortcut for relief of pneumoconiosis
victims

Tokyo Shimbun:
(1)Russia's caliber to be tested in G-8 summit
(2)Internet gaps should be narrowed in information society

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, July 12

NIHON KEIZAI (Page 2) (Full)
July 14, 2006

Evening:
Stayed at David Citadel Hotel in Jerusalem

Prime Minister's schedule, July 13

Morning:
-- Inspected the old town of Jerusalem.
-- Arrived at Ramallah.
-- Attended a welcome ceremony held at the Chairman's Office.

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-- Met with Chairman Abbas of the Palestinian Authority.
-- Attended a ceremony to unveil the reconstructed Chairman's
Office.
-- Held a joint conference.
Noon:
Luncheon hosted by Chairman Abbas
Afternoon:
Left Israel by a government plane.
Evening:
Arrived at Aqaba, Jordan.

4) Government considering revising sanctions resolution against
North Korea; May remove mention of UN Charter Chapter 7

ASAHI (Top play) (Full)
July 14, 2006

In response to China and Russia's presentation of their own
resolution condemning North Korea's missile launches, the Japanese
government has begun considering modifying the sanctions resolution
jointly presented to the UN Security Council with the United States,
Britain, France, and other countries. One plan being mentioned would
be to excise from the text the parts pertaining to Chapter 7 of the
UN Charter, in compliance with the strong opposition to such text
from China and Russia. Although the government still firmly intends
to ensure the effectiveness of the sanctions, Tokyo will look for
ways to move closer to the stance of China and Russia by giving
priority to the Council's adoption of the resolution.

Some in the Japanese government gave a positive assessment to the
fact that China, which had insisted before on an unbinding
presidential statement, has presented the resolution in cooperation
with Russia. A senior Foreign Ministry official commented yesterday,
"Negotiations over wording effectively start today."

In considering modifying the text, the focus will be on the fact
that the Japan-led sanctions resolution: (1) recognizes the
launching of missiles as a threat to international peace and
security; (2) mentions Chapter 7 of the UN Charter that calls for
enforcement measures, including economic sanctions and the use of
force; and (3) mandates the UN members to take specific sanctions
measures.

Chapter 7 of the UN Charter stipulates enforcement measures,
including economic sanctions and the use of force. With the UNSC's
recognition as "a threat to peace, the destruction of peace, or an
act of aggression," the chapter allows not only economic sanctions
but also future military action.

In accordance with Chapter 7, the sanctions resolution mandates the
UN member countries to prohibit shipments of goods, including
intermediate materials, technologies, and funds that would
contribute to North Korea's programs for producing missiles and
weapons of mass destruction, and its procuring of missiles and
missile-related materials and technology. In contrast, the joint
China-Russia resolution "seeks" measures instead of mandating the
member countries to comply and makes no mention of Chapter 7.

Reversing its stand, the Japanese government has decided to search
for ways to secure the efficacy of sanctions by eliminating the
parts pertaining to Chapter 7. A Foreign Ministry official noted
yesterday: "We don't have to stick to Chapter 7. We just want to

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make sure that the contents of the sanctions will be realized."

At the same time, defining missile launches as a "threat" to
international peace and security is still a top priority for Tokyo.
The government does not intend to change that part because
identifying an act subject to the resolution as a "threat" is a
prerequisite for invoking enforcement measures.

5) Chief Cabinet Secretary Abe meets with US professor, who visited
Pyongyang

ASAHI (Page 4) (Full)
July 14, 2006

Chief Cabinet Secretary Shinzo Abe met yesterday with Robert A.
Scalapino, professor emeritus at the University of California,
Berkeley, who visited Pyongyang last month. In the meeting, Abe
said: "It is a question whether North Korea knows well that China
thinks the North must not collapse."

Scalapino replied: "China does not want to see North Korea's
collapse. It is important to change Pyongyang's policy while
preventing it from collapsing."

Abe said: "If North Korea takes action based on the thinking that it
will always be able to get support no matter what it does, the
issues will not be resolved."

6) Ozawa: The US has removed the ladder from Japan

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

Appearing on a TV-Asahi program on July 12, Minshuto (Democratic
Party of Japan) President Ichiro Ozawa said this regarding the
Japan-drafted sanctions resolution against North Korea, that has
encountered difficulty:

"From the beginning, I had a feeling that such would happen. The
United States has no intention of seriously locking horns with North
Korea and China. The ladder (for Japan) seems to have been removed.
As far as Japan-US relations are concerned, the essential part has
not been talked over. Prime Minister (Junichiro) Koizumi thinks
currying favor with the United States helps build relations of
trust, but his thinking is wrong."

7) Prime Minister Koizumi declares an offer of 30 million dollars in
aid to Palestinian Authority during summit meeting

NIHON KEIZAI (Page 2) (Full)
July 14, 2006

Masanobu Yamaguchi, Ramallah (West Bank)

Prime Minister Junchiro Koizumi, now on his tour of the Middle East,
yesterday morning (yesterday afternoon, Japan time) met with
Palestinian Authority President Abbas at his residence and declared
that Japan would provide the Palestinian Authority with a total of
30 million dollars (some 3.4 billion yen) in emergency aid to be
used for such purposes as improving Palestinians' living environment
and job creation. Referring to the armed conflict with Israel,
Koizumi urged Abbas "to deal with the situation with a sense of

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discipline and reason."

At a joint press conference after the meeting, Koizumi stressed:
"Japan does not have a strong influence in the region like European
nations and the United States, but we'd like to support the
Palestinian Authority and Israel seek coexistence and coprosperity."
Abbas responded: "We appreciate Japan's initiative and are pleased
with it."

Specific steps for emergency aid indicated by Koizumi include (1)
improvement in water supply; (2) provision of medical equipment; and
(3) reconstruction of the presidential residence. As medium- and
long-term projects, Koizumi came up with an idea of creating a
"corridor for peace and prosperity" to comprehensively develop the
area around the Jordan Valley. Abbas expressed approval of the
idea.

Referring to a four-party framework for Israel, Jordan, the
Palestinian Authority, and Japan to discuss how to bring peace to
the region, Koizumi stated that in order to put the idea into
practice, "I'd like to establish four-party talks at the senior
working level at an appropriate time."

8) Unexpected miscalculation in Koizumi diplomacy toward Middle
East

NIHON KEIZAI (Page 2) (Full)
July 14, 2006

Masanori Yamaguchi, Ramallah (West Bank)

Following the Japan-Israel summit meeting on the previous day, Prime
Minister Junichiro Koizumi indicated that he would be actively
engaged in peace talks on the Middle East during the meeting with
Palestinian Authority President Abbas. But tensions in the Middle
East began rising after Koizumi's tour of the region started. His
strategy to attend the upcoming Group of Eight (G8) summit in St.
Petersburg bearing the fruit of his diplomacy has been dampened.

Koizumi urged both Israel and the Palestinian Authority to exercise
self-restraint regarding the use of FORCE and pledged to provide aid
to them from a medium- to long-term perspective on the condition
that dialogue between them resumes. The leaders of the two sides
voiced appreciation for Japan's role, but Israel has intensified its
attacks on Lebanon in retaliation for the abduction of Israeli
soldiers, and there are no prospects in sight for a solution to the
Palestinian issue.

Koizumi maintains a good relationship with Israel, backed by his
close ties with the Bush administration. Meanwhile, Japan has
continued reconstruction assistance to the Palestinians. Perhaps for
this, most of the Palestinian Authority's buildings flew the
Hinomaru. His Middle East tour was supposed to give him a good
opportunity to highlight the difference in Japan's assistance from
that of Europe and the US, according to Koizumi, because Japan has
few interests in the region. If he demonstrated his presence in
peace efforts on the Middle East during the upcoming St. Petersburg
Summit starting tomorrow, Japan might have had "a strong voice in
dealing North Korea's recent missile launches," a senior Foreign
Ministry official said.

While the fate of the Japan-sponsored resolution on North Korea

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submitted to the United Nations Security Council remains unknown,
the worsening of the Middle East situation represented an unexpected
miscalculation by Koizumi.

9) Prime Minister Koizumi's Middle East tour highlights difficulties
in bringing peace to the region; Coordination over establishment of
four-party talks may run into trouble amid intensifying disputes

YOMIURI (Page 2) (Excerpts)
July 14, 2006

Takayuki Tanaka, Jerusalem; Mina Mitsui of the Jerusalem Bureau

Prime Minister Koizumi wound up his tour of Israel and the
Palestinian region where disputes are still continuing. His tour of
the Middle East may be described as boldly setting foot into a
minefield, given that other countries' leaders tend to keep away
from diplomatic activities toward the region. But even while he was
visiting the region, hostilities were intensified, making him
realize anew how deep the confrontation is and how difficult it is
to contribute to bringing peace to the Middle East.

Koizumi yesterday met with Palestinian Authority President Abbas and
emphasized to him about why he had decided to visit the region at
this point: "I wanted to come here before the Group of Eight (G8)
St. Petersburg Summit deals with the Middle East issue. I'd like to
convey directly my intention to 'support President Abbas.'"

Opposition parties in Japan are criticizing the prime minister's
tour of the Middle East at this point. Naoto Kan, acting president
of the Democratic Party of Japan (Minshuto),flung this barb at the
prime minister: "At a time when (North Korea's missile launches) may
burn his house, he is trying to help put out the fire in someone
else's house." But Koizumi was reportedly adamant about making a
tour of the Middle East.

The showcase of his Middle East tour is his proposal for
establishing four-party talks among Israel, the Palestinian
Authority, Jordan, and Japan to discuss how to bring peace to the
Middle East. This idea will be advanced under regional development
in Japan's official development assistance (ODA) program. Both
Israel and the Palestinian Authority have agreed with the idea, and
the initiative will be put into practice. But amid the intensifying
disputes in the region, the efforts to coordinate as to when to
establish the four-party talks and how to promote them may run into
difficulties. In addition, given that the leading players in peace
talks on the Middle East so far have been the United States, the
European Union, and the United Nations, coordination with those
parties concerned over the four party talks proposed by Japan is
also essential.

10) Foreign Ministry to establish new South Asia desk to strengthen
diplomacy toward India

ASAHI (Page 2) (Full)
July 14, 2006

The Ministry of Foreign Affairs will establish on August 1 a South
Asia Department (Nanbu-Ajia-bu) in order to strengthen its diplomacy
toward the South Asia region that includes India and ASEAN
countries. In addition, the Ministry also will establish on the same
day an International Cooperation Bureau that will integrate various

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offices related to official development assistance (ODA) of the
Economic Cooperation Bureau and the International Social Cooperation
Department, the aim being to make the government's ODA program more
effective. It also will install a councilor (shingikan) for global
scale issues in order to tackle such policy issues as ODA and
infectious diseases. The portion responsible for United Nations
administrative and financial policy in the above department will be
placed under the Foreign Policy Bureau, and the department itself
will be abolished.

The South Asia Department will cover India, Pakistan and other South
Asian countries, as well as the ASEAN countries that include
Thailand and Indonesia. The government especially wants to put more
efforts into strengthening relations with India, which is
experiencing outstanding economic growth.

11) PAC-3 deployment to Kadena likely next month

NIHON KEIZAI (Page 2) (Full)
July 14, 2006

Japan and the United States have entered into the final phase of
intergovernmental coordination for US Forces Japan (USFJ) to deploy
state-of-the-art Patriot Advanced Capability 3 (PAC-3)
surface-to-air guided missiles to the US AIR Force's Kadena base in
Okinawa Prefecture in August, officials said yesterday. The PAC-3
deployment is to constitute a missile defense system. USFJ has only
said the PAC-3 would be deployed within the year. However, the US
government has told the Japanese government that USFJ would move up
the deployment schedule in response to North Korea's recent firing
of missiles.

The PAC-3 will be deployed in Japan for the first time. Meanwhile,
the US Navy will also deploy an Aegis-equipped ship, to the Yokosuka
base, with Standard Missile 3 (SM-3) missiles on board to intercept
ballistic missiles at sea. The US military will expedite building up
the land- and sea-based intercept systems.

In May this year, the Japanese and US governments finalized a report
on their talks over USFJ realignment. This final report refers to
the US military's plan to deploy PAC-3 missiles in Japan, noting
that the US military's PAC-3 capabilities will be deployed to its
existing facilities and areas in Japan and will be operational as
soon as possible.

In the meantime, the Defense Agency is also going along with these
US military deployment plans. The agency will introduce PAC-3
missiles to the AIR Self-Defense Force's Iruma base in Saitama
Prefecture within the current fiscal year. The agency plans to
deploy PAC-3s to four ASDF bases in Japan in four years. Defense
Agency Director General Fukushiro Nukaga has ordered officials to
look into the possibility of frontloading the ASDF's PAC-3
deployment in response to North Korea's missile firing.

12) US to return ammo depot in part

NIHON KEIZAI (Page 2) (Full)
July 14, 2006

Japan and the United States held a meeting of their
intergovernmental joint committee yesterday in Tokyo. In the
meeting, the US government agreed with the Japanese government to

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return a plot covering about 584,000 square meters in US Forces
Japan's Kadena Ammunition Storage Area in the city of Okinawa. The
US military is expected to vacate and return the land this fall.

According to the Defense Facilities Administration Agency, the site
will be used as a roofed firing range and as a training area for the
Self-Defense Forces.

13) USFJ, SDF need to strengthen cooperation

NIHON KEIZAI (Page 2) (Full)
July 14, 2006

The ruling Liberal Democratic Party yesterday evening held a party
of its House of Representatives members in the city of Ginowan,
Okinawa Prefecture. In the party, former LDP Vice President Taku
Yamasaki stressed the need for US Forces Japan (USFJ) and Japan's
Self-Defense Forces (SDF) to strengthen their cooperation in
connection with North Korea's recent firing of missiles. Yamasaki
likened Japan to a "shield" and USFJ to a "spearhead" in their
bilateral relations. "It's very important to cooperate between Japan
and the United States in the defense area to cope with the threat of
North Korea," Yamasaki said.

14) Finance Minister Tanigaki cautious about enemy strike argument

ASAHI (Page 4) (Full)
July 14, 2006

Referring in a meeting of his faction to the enemy-base strike
argument triggered by North Korea's missile launches, Finance
Minister Sadakazu Tanigaki said yesterday in a strong tone:

"I think it's legally possible, but we must seriously consider what
roles Japan and the United States should play under the Japan-US
Security Treaty. I think it is necessary for us to carefully discuss
the matter, including how to build relationships of trust with
neighboring countries, from a broad range of perspectives."

Liberal Democratic Party (LDP) General Council chairman Fumio Kyuma
told reporters yesterday: "It would be better for us not to discuss
the matter when we are all angry. We should act prudently at such a
time."

Kyuma said:

"It probably can be said that Article 9 of the Constitution does not
deny us to attack another country when Japan learns clearly that it
will be hit (by a missile). However, whether to do so or not is a
delicate issue requiring a policy judgment."

Regarding the Iraq war that the United States launched, citing as a
reason that Iraq had weapons of mass destruction, Kyuma said, "I
don't sense that the war was for the purpose of self-defense."

15) Minshuto to produce party view on US FORCE realignment

YOMIURI (Page 4) (Full)
July 14, 2006

Minshuto (Democratic Party of Japan) decided yesterday to produce a
unified party view on the realignment of US forces in Japan. Last

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August, the party released a new Okinawa vision to search for ways
to remove the US Marine Corps' Futenma AIR Station out of Okinawa.
But given the new circumstances, as evidenced by a Japan-US
agreement to relocate the airfield to the coast of Camp Schwab, the
largest opposition party decided to come up with it its unified view
on overall US FORCE realignment.

The party will begin studying its view after exchanging opinions
with local experts in Naha City on July 15.

16) Gov't ordered to pay 4 billion yen in damages for Atsugi base
noise

SANKEI (Page 2) (Abridged)
July 14, 2006

The Tokyo High Court yesterday handed down its ruling on an appeal
from the state against a lower court ruling on a third class action
suit, in which about 4,800 local residents living in Yamato and some
other cities in Kanagawa Prefecture sued the government for damages
over aircraft noise caused by the US Navy's Atsugi Base, which is in
joint use with the Maritime Self-Defense Force. Presiding Judge
Toshimi Ouchi supported the Yokohama District Court's ruling of
first instance and rejected the state appeal, admitting: "Local
residents have been suffering from intolerable damage (from aircraft
noise),and the government's setup and management of the base are
unlawful."

The court-ordered damages total approximately 4 billion yen,
including about 1.3 billion to cover the period of legal action in
the past. The amount of compensation is a record for an aircraft
noise lawsuit. In November last year, the Tokyo High Court ordered
the government to pay about 3.2 billion yen in damages for Yokota
Airbase noise.

The court turned down the plaintiff's claim for future damages.

17) FTA talks; Japan, India agree to launch negotiations; Top-level
meeting to be held on sidelines of St. Petersburg Summit

YOMIURI (Page 9) (Excerpts)
July 14, 2006

It was learned yesterday that Prime Minister Koizumi and Indian
Prime Minister Singh are expected to start free trade agreement
(FTA) talks at a meeting to be held on the sidelines of the G-8
Summit (St. Petersburg Summit). India is the first of the BRICs
(Brazil, Russia, India, and China) with which Japan will enter into
FTA talks. The plan is to start working-level talks as early as this
year.

The two countries will release at the summit a report on FTA
research that their joint study group has conducted. The report is
expected to encourage the two countries to enter into FTA
negotiations with results underscoring that the economies of the two
countries would complement each other.

India's economy has continued to grow at 8 PERCENT -9 PERCENT a
year over the past several years with the information technology
industry serving as a driving force.

In trade with India, Japan imports jewelry, marine products, and

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iron ore and exports auto parts and other products. However, that
nation stood twenty-sixth among importers of Japanese products in
2005, and as an exporter, it was in the twenty-ninth place.

18) FTA with Malaysia comes into FORCE

YOMIURI (Page 9) (Excerpts)
July 14, 2006

A ceremony to put into FORCE an economic partnership agreement (EPA)
with Malaysia featuring an FTA was held yesterday in Tokyo. Four
Japanese ministers, including Economy, Trade, and Industry Minister
Nikai, and Malaysian International Trade and Industry Minister
Rafidah signed related documents. Malaysia is Japan's third FTA
partner, following Singapore and Mexico. Trade (total export and
import values) with that nation stood at approximately 3.23 trillion
yen in 2005, topping the amounts with Singapore and Mexico. The
government wants to use the FTA with Malaysia to accelerate FTA
talks with the Association of Southeast Asian Nations (ASEAN),an
area in which Japan is lagging behind China.

With the enactment of the FTA with Malaysia, tariffs worth
approximately 97 PERCENT of the trade amount with that nation will
be scrapped over the next decade. Japan is expected to increase
exports of mined and manufactured products, such as autos and steel,
and exports of agricultural products by Malaysia, such as mangoes,
will likely expand.

19) East Siberian oil pipeline: Japanese, Russian leaders to agree
to go ahead with construction

SANKEI (Page 1) (Excerpts)
July 14, 2006

St. Petersburg, Shogo Otsuka

It was learned yesterday that Tokyo and Moscow will agree to launch
a new energy project for Russia to supply crude oil to Japan via
East Siberia. The initiative to construct a natural gas pipeline
through Sakhalin is already underway between the two countries.
Japan wants to reduce its dependence on the Middle East for crude
oil, and Russia wants to find a new customer for its natural
resources. The new plan is the outcome of their desires matching
each other's needs. The project is also aimed at countering the
energy policy of China, which is actively trying to secure natural
resources throughout the world in order to meet a sharp rise in
domestic demand. Japan also wants to pursue natural resources
diplomacy with Russia.

Prime Minister Koizumi and Russian Prime Minister Putin will meet
ahead of a dinner meeting at the G-8 Summit, which is to start on
July 15. The two leaders are expected to reach an agreement on the
promotion of the construction of a pipeline.

According to the plan, efforts to reach agreement will be focused on
the construction of a new Pacific route to be connected with the
first section of the pipeline for the supply of crude oil to the
coastal area of the Pacific Ocean. Chances are that it will also
include a plan to develop a new oil field in East Siberia.

SCHIEFFER