JAPANESE MORNING PRESS HIGHLIGHTS 08//06

UNCLAS SECTION 01 OF 10 TOKYO 004323

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: JAPANESE MORNING PRESS HIGHLIGHTS 08//06


Index:

1) Top headlines
2) Editorials
3) Prime Minister's daily schedule

Defense and security affairs:
4) LDP approves change in Iraq basic plan to reflect withdrawal of
GSDF and expansion of ASDF services
5) Australia's foreign minister in meeting with Prime Minister
Koizumi calls bilateral cooperation in Iraq a "complete success"
6) Foreign Ministry gives commendations to 75 personnel who served
in Iraq
7) Three candidates for LDP presidency Abe, Aso, Tanigaki all
agree on Japan's use of right of collective self-defense
8) Kadena Air Base has 400,000 rounds of DU ammunition in storage,
half the amount that was used in the Gulf war
9) MSDF petty office who took frequent trips to Shanghai, kept
classified documents at home, suspected of leaking such information
to Chinese girlfriend
10) Minshuto President Ozawa raps JDA's white paper on defense for
treating China with alarm

Iran problem:
11) Iran's vice president interviewed by Mainichi dismisses UNSC
resolution as having no impact on oil field development project
12) Government to explain to Iran its support for UNSC resolution,
but fears impact of decision on oil development project
13) Japan fears its oil field development project in Iran is in
trouble
14) JBIC loan exposure in Iran now totals 570 billion yen; Bank
fears delay in repayment

15) MOFA appoints new director of China Division who is not from the
"China school"

16) Three Minshuto leaders spending time deep-sea fishing off Miyake
Island: Practicing their hooking and landing skills for next year's
election?

Articles:

1) TOP HEADLINES

Asahi:
Matsushita Electric Co.'s affiliate received 200 million yen in
subsidies from Hyogo Prefecture for temporary hires, but later
changed the status from temporary hires to contractors

Mainichi:
Poll on international comparison of home education: Japanese fathers
spend 3.1 hours with children on weekdays, mother's 7.6 hours,
giving Japan the largest gap

Yomiuri:
MSDF's petty officer 1st class found to have removed classified
information; Frequently traveled to Shanghai to meet Chinese
girlfriend, who may have connection with the other diplomat's
suicide

Nihon Keizai & Sankei:
Oji Paper to make hostile TOB toward Hokuetsu Paper today

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Tokyo Shimbun:
Girl's death in pool drain: Management company commissioned by the
city found to have subcontracted maintenance

Akahata:
Poll: 70% say they are "worse off than last year"; 60% suffer an
income decrease

2) EDITORIALS

Asahi:
(1) UNSC resolution: No choice for Iran
(2) Economic growth will be a big task for the next administration

Mainichi:
(1) Girl's death in pool drain: Full-fledged safety checks required
(2) UNSC resolution on Iran: Iran's efforts needed for stability in
Middle East:

Yomiuri:
(1) Defense White Paper: Need for establishing a basis for "assured
security"
(2) UNSC resolution on Iran: International unity is essential

Nihon Keizai:
(1) Land deflation coming to an end in big cities
(2) Need to resolve Iranian nuclear issue based on UNSC resolution

Sankei:
(1) Defense White Paper: Be alert to nearby military buildups
(2) Girl's death in pool drain: Lack of awareness of danger

Tokyo Shimbun:
(1) Girl's death in pool drain: Every possible measure must be taken
to avoid a recurrence
(2) Iran required to observe resolution to avoid sanctions

Akahata:
Defense White Paper: Does it override the people's will?

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, August 1

NIHON KEIZAI (Page 2) (Full)
August 2, 2006

10:01
Attended a cabinet meeting at Kantei.

11:00
Met deputy Chief Cabinet Secretary for Crisis Management Noda and
Cabinet Office policy officer Masuda.

12:01
Met Chief Cabinet Secretary Abe.

13:43
Met Upper House member Hiroshige Seko.

14:52

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Met LDP Kumamoto chapter chairman Mitsuhiro Koga in the presence of
Lower House member Toshikatsu Matsuoka.

15:05
Incoming and outgoing Vice Agriculture Minister Kobayashi and
Ishihara, followed by Foreign Vice Minister Yachi.

16:32
Attended a meeting of ministers connected with flood
countermeasures.

17:33
Met Australian Foreign Minister Downer.

19:07
Dined at an Italian restaurant in Akasaka with Deputy Chief Cabinet
Secretary Futahashi and assistant deputy chief cabinet secretaries

SIPDIS
Ando, Saka, and Yanagisawa, and others.

22:01
Returned to his residence.

4) LDP approves new masterplan for Iraq

SANKEI (Page 5) (Full)
August 2, 2006

The government has altered its basic plan for Japan's overseas
dispatch of Self-Defense Forces personnel to assist Iraq with its
reconstruction under a special measures law, and the ruling Liberal
Democratic Party approved the modified masterplan in a joint meeting
of its defense related panels yesterday. The masterplan was revised
in response to the withdrawal of Ground Self-Defense Force troops
deployed in the southern Iraqi city of Samawah and the expansion of
Air Self-Defense Force activities. The government will make a
cabinet decision on Aug. 4 to adopt the revised plan.

The new basic plan has crossed out stipulations regarding GSDF
activities. Instead, it specifies Taril and Arbil in addition to
Baghdad, Basra, Mosul, and Balad for ASDF activities in Iraq. The
ASDF's Iraq mission is up to Dec. 14 this year as initially
planned.

The revised plan says the government will conduct ASDF activities in
an appropriate way, factoring in various conditions, such as: 1)
progress in the political process of establishing Iraq's effective
governance; 2) public security in Iraq; 3) activities conducted by
the multinational force and changes in its constitutional members;
and 4) progress in the reconstruction of Iraq. The original basic
plan referred to the GSDF's Iraq deployment premised on "activities
conducted by Britain, Australia, and other multinational force
members in Iraq."

5) Australian foreign minister tells Koizumi: Cooperation between
Japan and Australia was complete success

ASAHI (Page 4) (Full)
August 2, 2006

Australian Foreign Minister Downer, now visiting Japan, met
yesterday with Prime Minister Junichiro Koizumi at his office. In
the meeting, Koizumi expressed his gratitude for Australian forces'

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role of the maintenance of order in the southern Iraqi city of
Samawah. Downer then told Koizumi: "Cooperation between Japan and
Australia was a complete success." In his meeting with Chief Cabinet
Secretary Shinzo Abe, the Australian foreign minister stated that

SIPDIS
his country would closely cooperate with Tokyo on North Korea's
nuclear and missile issues, as well as the abduction issue.

6) Foreign Ministry gives awards to personnel who served in Iraq

ASAHI (Page 4) (Full)
August 2, 2006

The Foreign Ministry gave awards yesterday to 75 people who served
at the embassy in Iraq or the liaison office in Samawah more than
twice since the start of the Iraq war. At the ceremony held at the
ministry, Samawah liaison office director Hidenobu Sobashima
reported: "We were able to accomplish visible results by improving
the living environment and creating jobs."

Foreign Minister Taro Aso also praised their services by citing the
2003 tragedy involving Ambassador Katsuhiko Oku and First Secretary
Masamori Inoue, saying: "The two lives were lost in the
unforgettable, heart-breaking incident. To accomplish their wishes,
you performed activities in the extremely difficult environment with
a strong sense of mission."

7) 3 LDP presidential candidates favor collective defense

NIHON KEIZAI (Page 2) (Full)
August 2, 2006

Chief Cabinet Secretary Shinzo Abe, Finance Minister Sadakazu
Tanigaki, and Foreign Minister Taro Aso remarked yesterday that they
would accept Japan exercising its right to collective self-defense.
The right of collective self-defense allows a country to fight back
against an attack on its ally. The government, in its constitutional
interpretation, has taken the position that Japan has the right but
is not allowed to exercise it.

Abe, meeting the press yesterday, remarked: "Not only in the LDP but
also in the nation, there are people insisting on revising the
Constitution to resolve the problem, and there are people saying
Japan is allowed to exercise the right even in the current
constitutional interpretation." Abe added, "I also think we should
always keep this in mind."

Tanigaki clearly said to reporters in the Diet yesterday, "I think
Japan should be allowed to exercise the right of collective
self-defense." However, Tanigaki also suggested the need for a
national consensus based on broad discussions on constitutional
revision. Meanwhile, Aso also said to reporters after yesterday's
cabinet meeting, "There are various arguments about this issue, so I
don't think it would be very meaningful to state my personal views."
He also said, "I've always thought that it would be bad for our
country to be destroyed for adhering to the law."

8) USFJ stored 400,000 DU shells at Kadena base in 2001

MAINICHI (Page 27) (Full)
August 2, 2006

The US Air Force stored about 400,000 depleted uranium shells in

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2001 at its Kadena Base in Okinawa Prefecture. This fact became
known from declassified US Air Force documents. The DU shells stored
at Kadena are equal to about half the number used by the US Air
Force in the 1991 Gulf War. In May 2000, the base revealed its
storage of DU shells at its ammunition depot. However, this is the
first time that the specific quantity has been revealed.

In February 2001, Kyle Kajihiro, an American peace activist from
Hawaii, requested the US Air Force to disclose all its records
regarding the US Pacific Forces' DU ammunition. In August that year,
the US Air Force disclosed documents as "records provided by the
Kadena Air Base and the Osan Air Base in South Korea."

One of the declassified files lists the types and quantities of DU
shells. This list describes the names and quantities of five shells
stored at the Kadena base, including "30MM API/HEI PGU 14B/B AJ"
(i.e., 30-mm armor-piercing incendiary, high-explosive incendiary).
Fighter planes are reportedly loaded with 30-mm armor-piercing
incendiaries to attack tanks and armored vehicles. Kadena Air Base's
DU ammo storage, classified into five categories, totaled 398,768
shells. In South Korea, the US Air Force stored 1,360,000 DU shells
at Suwon Air Base, about 930,000 at Chongju Air Base, and about
450,000 at Osan Air Base.

"Some of our weapons can use DU shells," a US Kadena Air Base
official told the Mainichi Shimbun. "But," the official added, "it's
our policy that we're not allowed to reveal anything specific about
where and how much ammunition we store." The official also said, "We
don't use DU shells in our training, and we fully consider the
safety of DU-handling military personnel and neighboring local
communities."

9) MSDF internal-use-only documents taken out of office; Petty
officer 1st class repeatedly traveled to Shanghai to meet Chinese
woman working at karaoke parlor frequented by Consulate General
communications officer committed suicide

YOMIURI (Top play) (Excerpts)
August 2, 2006

A 45-year-old Maritime Self-Defense Force petty officer first class
stationed at the Kamitsushima Guard Post repeatedly traveled to
Shanghai, China, without leave, and kept copies of documents marked
internal use only on CDs at his home, the Yomiuri Shimbun learned
yesterday. The purpose of his trips was to see a Chinese woman
working at a karaoke parlor catering to Japanese clientele, where a
Chinese woman involved in the suicide of a Japanese Consulate
General communications officer also worked. The petty officer has
reportedly told MSDF investigators that he did not pass any
intelligence to China. However, police authorities are conducting
their own investigation, suspecting that he leaked some information.
The police are attempting to determine, among other things, what
kind of relationship he had with the woman.

The petty officer assisted with vessel navigation duties at the
Kamitsushima Guard Post in Tsushima City, Nagasaki Prefecture, since
April 2004 until he was suspended from duty for 10 days in July. He
is currently stationed at the MSDF Sasebo District Headquarters'
administration department.

According to the Defense Agency's Maritime Staff Office, a
whistle-blower claimed in April that the officer was copying

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classified information and taking it out of the office and that he
had been going to China without reporting the trips to his
superiors.

Alerted by the tip, Sasebo headquarters began an investigation and
found CDs in the officer's living quarters at the Kamitsushima Guard
Post that contained MSDF documents, including photographs of
military ships and submarines belonging to neighboring countries.
The petty officer admitted that he copied the documents by using the
post's computer in February.

Officers from the Sasebo headquarters also found letters from the
Chinese woman at the petty officer's home. It was also found out
that in order to meet the woman, he had made eight trips to Shanghai
without leave during the 15-month period until this March.

10) Ozawa criticizes defense white paper for being alarmed at China

ASAHI (Page 4) (Full)
August 2, 2006

President Ichiro Ozawa of the largest opposition party Minshuto
(Democratic Party of Japan) criticized yesterday the 2006 defense
white paper that included a section urging China to increase the
transparency of its defense buildup and spending. Ozawa said:

"In order to eliminate a destabilizing factor, a relationship of
trust must be forged first. Nothing good will come out of a
confrontational mentality. Japan cannot conduct heart-to-heart talks
with China, South Korea, or any other Asian countries for that
matter. With China, Japan cannot discuss anything at all, and that's
the problem with Koizumi politics."

Ozawa was responding to questions from reporters in Miyake Island,
Tokyo.

11) Iran's vice president: "We'll continue negotiations" on nuclear
issue; No impact of UNSC resolution on Hinomaru oil project

MAINICHI (Page 2) (Full)
August 2, 2006

Eiji Maeda

In an exclusive interview yesterday with the Mainichi Shimbun,
visiting Iranian Vice President Rahim Mashaee criticized the United
Nations Security Council's (UNSC) adoption on July 31 of a
resolution threatening his country with sanctions as "unreasonable."
"We'd like to sweep away international doubts about our country and
continue negotiations," he said, indicating he would look for ways
to resolve the issue through negotiations. Referring to the
comprehensive policy package proposed by the United States, Britain,
France, Germany, China, and Russia, he reiterated that Iran would
come up with an answer by Aug. 22. While noting that the UNSC
resolution would have no effect on the development of the Azadegan
oilfield that Japan has the right to develop, he stressed Iran's
intention to expand economic ties with Japan.

Mashaee insisted that Iran's nuclear development is at the "research
level," emphasizing his country's right to use nuclear power for
peaceful purposes as a member of the Nuclear Nonproliferation Treaty
(NPT).

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In addition, he stated, "Iran has no intention to manufacture
nuclear weapons" and indicated an intention to continue talks
focused on the proposed policy package that offers such assistance
measures by European countries as constructing a light-water reactor
in return for Iran's halt to uranium enrichment.

Also, referring to the UNSC resolution, he pointed out that the UNSC
president's statement on the Lebanon situation did not criticize
Israel, arguing: "Because of pressure from the US, the UNSC has not
made any criticism of Israel, which is doing bad things. (Iran) is
given discriminatory treatment." "Some countries," he continued,
"are manufacturing nuclear bombs with the state-of-art technology."
Posing this question, "Who can guarantee that Israel will not use
nuclear weapons in the Middle East?" he criticized the double
standard of the US and other countries that have tacitly allowed
Israel's possession of nuclear weapons.

Commenting on Japan's voting for the resolution, Mashaee said, "It's
undesirable," but he added, "Economic ties (with Japan) are not
under any political pressure." He then emphasized: "Japan is a
friendly nation. We want to expand relations in such areas as
economic affairs."

12) UNSC resolution warning Iran over its nuclear development:
Government to push Tehran to accept resolution out of concern over
possible impact on oil development project; Japan relies on Iran for
10% of crude oil imports

TOKYO SHIMBUN (Page 2 (Full)
August 2, 2006

Following the adoption by the United Nations Security Council (UNSC)
of a resolution warning Iran that sanctions will be considered
unless it suspends its nuclear development activities by the end of
August, the government will make every effort to persuade that
nation to accept the resolution. That is because if sanctions are
invoked, followed by the suspension of crude oil imports from that
nation, the Japanese economy will suffer a major blow, as Japan
depends on Iran for about 15% of crude oil imports. The development
of oil fields in that nation, in which Japan has a major stake, will
also be affected.

Japan, a non-permanent UNSC member, supported the resolution.
Chances are that if Japan supports a sanctions resolution or takes
part in a coalition of the willing in response to a call from the
US, Iran could take countermeasures, including the cancellation of
the contract for the development of the Azadegan oil field, which
Japan won in February 2004.

Foreign Minister Aso yesterday noted, "The nuclear issue has
priority." He thus indicated his intention to press Iran to abandon
its nuclear development program, even if the oil project is "taken
hostage."

If full production starts at the Azadegan oil field, which is
believed to have 5-26 billion barrels of reserves, this oil field is
expected to become Japan's largest crude oil supplier. The
government wants to continue the development of the oil field by
getting Iran to abandon its nuclear development program soon.

It intends to push Iran to accept the resolution at every available

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opportunity, as Chief Cabinet Secretary Abe put it. However, to what
extent Japan's persuasion will work is unclear.

13) UNSC adopts resolution against Iran, warning of economic
sanctions over its nuclear development activities

ASAHI (Page 2) (Excerpts)
August 2, 2006

Japan concerned about possible impact of resolution on oil field
development

Japan has given priority to the solidarity of the international
community, instead of to crude oil.

Chief Cabinet Secretary Abe yesterday told a news conference: "The
UN resolution indicates the international community's firm stance
toward Iran. It is an important step toward settling that nation's
nuclear issue through diplomacy." Asked about a possible impact of
the resolution on Japan's energy strategy, Foreign Minister Aso
indicated a stance of attaching importance to the nuclear issue. He
noted, "The nuclear issue has priority."

A senior Foreign Ministry official explained, "The UN resolution
censuring North Korea adopted in July served as a precedent." He
also said: "The international community issued a warning in unity.
The pattern is the same as the case with Pyongyang."

However, if Iran does not follow the resolution before the
end-of-August deadline, the possibility of the UN slapping economic
sanctions on it will increase. Should that occur, it is bound to
affect Japan's energy strategy.

If crude oil trade with Iran, the world's fourth-largest crude oil
producer, becomes subject to sanctions, it would affect the global
crude oil market, sparking a further rise in prices. Japan is bound
to suffer, as it depends on Iran for roughly 15% of its crude
imports.

In particular, some Japanese government officials are concerned over
a possible impact of sanctions on the Azadegan oil field, which has
the largest reserves in the Middle East. Japan's INPEX Corporation
has a 75% stake in the Azadegan oil field. It is expected that once
production starts, imports from Iran could cover as much as 6% of
Japan's annual oil imports. If sanctions are invoked, Japan's
investment in this project could be suspended.

Ever since Japan obtained a stake in the Azadegan oil field in 2004,
the US has repeatedly warned that the investment could benefit Iran.
Some believe that if Japan withdraws from the project, China might
replace Japan. A senior official of the Ministry of Economy, Trade,
and Industry noted: "If China develops that oil field, replacing
Japan, Iran would suffer no pressure from the resolution. Oil
development is important for Japan." His comment revealed Japan's
real feeling that it does not want to abandon this large energy
resource.

14) JBIC reveals outstanding loan balance with Iran totals 570
billion yen as of end of March; Economic sanctions could delay
repayment

NIHON KEIZAI (Page 5) (Full)

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August 2, 2006

Japan Bank for International Cooperation (JBIC) Governor Kyosuke
Fujisawa during yesterday's press conference revealed that the
outstanding lending balance with Iran as of the end of March stood
at 570 billion yen. Japan's loan claims with that nation, including
yen loans, is estimated to top 600 billion yen. Chances are that if
economic sanctions are invoked, that nation will fall behind in its
debt repayments. Fujisawa indicated his intention to closely watch
the international situation, noting, "I would like to pay full
attention to the international situation."

The United Nations Security Council (UNSC) in late July adopted a
resolution mandating Iran to suspend its uranium enrichment-related
activities. It warned that unless the nation complies with the
resolution, it would invoke economic sanctions. Iran has indicated a
stance of rejecting the resolution.

If economic sanctions are invoked, trade and financial transactions
with Iran will be effectively put on hold.

Should that occur, there is a strong possibility of that nation
falling behind in its debt repayments, pressing the JBIC to boost
loan loss reserves. There is also concern that the matter will
eventually lead to a financial burden on the nation.

Fujisawa also revealed a plan to open an office in Amman, Jordan, to
look into the situation regarding Iraqi reconstruction assistance.

15) Foreign Ministry to appoint official who is not a member of
"China School" as China and Mongolia Division chief

ASAHI (Page 4) (Full)
August 2, 2006

Takeo Akiba, director of the Foreign Ministry's International Legal
Affairs Division, was named new director of the China and Mongolia
Division as of Aug. 1.

In the past, a pattern of members of the so-called China School, who
took Chinese training, assumed the China and Mongolia Division
director post. The China School members are regarded as giving too
much consideration to China. Akiba, who received English training,
is not a China School member. Japan-China relations show signs of
improvement, as seen in the holding of a foreign ministerial
meeting, but mutual summit visits by top Japanese and Chinese
leaders have been suspended due to Prime Minister Junichiro
Koizumi's annual visits to Yasukuni Shrine. With an eye on the
post-Koizumi era, the Foreign Ministry appears to be flexibly facing
up to China.

Akiba has engaged in consultations with China on such issues as gas
exploration in the East China Sea. He has enjoyed the confidence of
Asian and Oceanian Affairs Bureau Director General Keiichiro Sasae
and has communication channels to the ruling and opposition parties.
It has been widely viewed since late last year that Akiba would
serve in the post.

16) Three Minshuto leaders go fishing off Miyake Island, Will it
help them capture the political helm as well?

YOMIURI (Page 4) (Full)

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August 2, 2006

Minshuto (Democratic Party of Japan) President Ichiro Ozawa, Acting
President Naoto Kan, and Secretary General Yukio Hatoyama yesterday
visited Miyake Island (Miyake Village, Tokyo),where they boarded a
boat and went deep-sea fishing together, playing up their unity.
They caught about 80 fish, including parrot bass and Japanese horse
mackerels. Ozawa was in the best of spirits: "What is most important
in a democracy is numbers, so it was good we hauled up so many
fish."

The three leaders of the largest opposition party enjoyed fishing
for six and a half hours from early in the morning. Fishing is one
of Ozawa's hobbies. Kan and Hatoyama, however, are novices at
fishing. Ozawa gave them advice about how to fish. Kan, who released
a big fish, told reporters, "I think I will be good at catching fish
around the fall of next year." He implied his eagerness for
capturing the reins of government.

SCHIEFFER