DAILY SUMMARY OF JAPANESE PRESS 10/11/06

UNCLAS SECTION 01 OF 08 TOKYO 005902

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 10/11/06


INDEX:

(1) North Korea in bind due to financial sanctions; Freeze on
General Secretary Kim's 24 million dollars; Funds to buy loyalty
depleted

(2) Why did North Korea carry out nuclear test on Oct. 10? Did it
choose day between anniversary of assumption of Secretary Kim and
anniversary of formation of Korean Workers Party? Tit-for-tat action
against Japanese, South Korean leaders?

(3) Japan, US to study WMD countermeasures

(4) Japan, US will now work in even closer cooperation

(5) Poll on Abe cabinet, political parties, educational reform,
North Korea, China, South Korea

(6) Internet polling: Abe cabinet popular with unaffiliated young
women

(7) Business circles hoping for economic exchange to be promoted
between Japan, China, following summit

(8) Akie Abe, wife of Prime Minister Abe, who speaks Korean, becomes
topic of conversation in Seoul; Reads Korean poem for elementary
school children; Receives great applause from students

ARTICLES:

(1) North Korea in bind due to financial sanctions; Freeze on
General Secretary Kim's 24 million dollars; Funds to buy loyalty
depleted

YOMIURI (Page 3) (Excerpts)
October 11, 2006

North Korea has opted to confront the international community by
announcing that it has conducted a nuclear test. General Secretary
Kim Jong Il, the country's supreme leader, has taken an
ultra-hard-line measure, while being fully aware that his nation's
economy will suffer a further setback when hit by even tougher
sanctions following the nuclear test. He presumably judged that the
only way for his country to survive is to take the international
community's encirclement net as a "crisis" for his communist regime
and strike back by making North Korea into a nuclear power. What
drove North Korea into going to such an extreme?

Oct. 10 marked the 61st anniversary of the formation of the Korean
Workers Party. However, according to press reports from Pyongyang,
there was no celebratory mood in the city. The communist party's
organ paper Rodong Shinmun and the cabinet's organ paper Democratic
Korea carried an editorial praising the party's politics for giving
priority to military matters, but it did not refer to the nuclear
test.

Professor Kim Yong Su at Sogang University explained, "North Korea
is in a tense situation."

The main reason is the impact of international sanctions. The US in
September 2005 invoked financial sanctions against Banco Delta Asia
(BDA) in Macau, a bank with which North Korea had an account, citing
the DPRK's use of the bank to launder money gained from

TOKYO 00005902 002 OF 008


counterfeiting greenbacks. Financial institutions of about 20
countries, such as France and Singapore, followed suit and stopped
transactions with North Korea. North Korea has come up short so
seriously that it asked a South Korean bank, which had set up a
branch in the Kaesong Industrial Park, a project jointly being
developed by the two Koreas, to open a bank account for the North,
but its request was turned down.

Secretary Kim was hard hit by the financial sanctions, because the

SIPDIS
money in the frozen account - approximately 24 million dollars - was
reportedly his own funds, which he used to govern the country. He
had used this money in order to secure loyalty by showing "Dear
Leader's" consideration, awarding Mercedes cars and expensive
watches to senior officials and food to ordinary citizens. Chong
Song Jang, researcher at the South-North Relations Research center
of the Sejong Institute noted, "Now Kim cannot give gifts, since he
cannot withdraw that money. He lost face, so another aim of the
nuclear test therefore was for Secretary Kim to restore face."

Flood damage caused by torrential rains in mid-July added to the
setback stemming from the financial sanctions. The North Korean side
reported the death toll at about 850. However, damage to homes was
enormous. Pyongyang asked Seoul to send cement for recovery work.
Professor Kim noted, "The morale of not only the civilian population
as well as the military was seriously damaged due to the flood
damage -- though the military received a temporary boost when the
North test-fired missiles on July 5. Secretary Kim probably wanted
to restore morale damaged by the flood."

Rumor about power struggle between party and military

Rumor has it that infighting is taking place within the leadership,
which has engaged in competition to show loyalty to Kim. South
Korea's Yonhap News Agency reported that Kim and the military
jointly decided to carry out the nuclear test. The Foreign Ministry,
which has failed to win concessions from the US, though it is in
charge of the six-party talks, was kept in the dark.

The military and the party have been considered as two wheels of a
cart for the North Korean regime. The view is growing, however, that
an increasing number of party members are unhappy with the situation
in which the military alone is becoming powerful due to the regime's
trend of giving top priority to military matters.

(2) Why did North Korea carry out nuclear test on Oct. 10? Did it
choose day between anniversary of assumption of Secretary Kim and
anniversary of formation of Korean Workers Party? Tit-for-tat action
against Japanese, South Korean leaders?

YOMIURI (Page 3) (Full)
October 11, 2006

The predominant view is that North Korea decided to conduct a
nuclear test on the day between the 8th, the 9th anniversary of the
assumption of Kim Jong Il as Secretary of the North Korean Communist
Party and the 10th, the 61st anniversary of the formation of the
Korean Workers Party - Oct. 9.

Professor Nam Song Uk at Koryo University in South Korea, noted,
"Chances are high that North Korea had been preparing to conduct the
test on the 9th, since it released the announcement on Oct. 3
notifying its plan to carry out such a test."


TOKYO 00005902 003 OF 008


There were no reports on Kim's activities since his inspection of
the Kimkangsan test site on Sept. 15. But on the evening of Oct. 5,
he reportedly met with participants of a congress of the commander
of the Korean People's Army and the battalion political leadership.
The prevailing view is that Kim withdrew into seclusion during this
19-day period and decided to carry out a nuclear test, after drawing
up a strategy. It is true that Kim frequently meets with mid-ranking
military personnel before he makes key decisions.

Some also take the view that Kim chose Oct. 9 to get his revenge on
Prime Minister Abe, who has been taking a hard-line stance toward
Pyongyang, and South Korea President Roh Moo Hyun, who has suspended
humanitarian assistance to North Korea under international pressure.
He, however, avoided Oct. 8, when the Japan-China summit meeting
took place, thereby staving off infuriating China.

North Korea has apparently prepared the nuclear test under
extraordinary secrecy. Even so, the US had detected Pyongyang's
moves. Japanese and US government officials during last week's
meeting shared the view that there was a possibility of Pyongyang
conducting a nuclear test over the weekend.

(3) Japan, US to study WMD countermeasures

YOMIURI (Page 2) (Full)
October 11, 2006

Japan and the United States will set about an intergovernmental
study of a framework for bilateral cooperation, as well as specific
measures, in order to prevent the proliferation of damage resulting
from the actual use of weapons of mass destruction, such as nuclear,
biological, and chemical (NBC) weapons. The Japanese and US
governments will hold a meeting of senior working-level officials in
Washington from Oct. 11 to talk about the realignment of US forces
in Japan and other bilateral issues. At the same time, working-level
officials from the Japanese Defense Agency and the US Department of
Defense will exchange views for the first time.

The two governments have decided to move up their initial schedule
for their talks since North Korea went ahead with a nuclear test.
North Korea has admitted to its possession of biological and
chemical weapons. North Korea's stockpiles of chemical weapons
amount to 4,000 tons, according to the South Korean National
Intelligence Service.

In their upcoming consultations, the Japanese and US governments,
with North Korea's potential use of NBC weapons in mind, will
presumably focus on specific measures, such as: 1) decontaminating
areas contaminated with the use of NBC weaponry; and 2) preparing to
conduct military operations on a standing basis in contaminated
areas. The two governments also mull working together to develop
anti-NBC equipment in the future.

The two governments will have the results of their consultations
reflected in their "bilateral defense planning" for emergencies in
Japan and also in their "mutual cooperation planning" for
emergencies in areas surrounding Japan.

(4) Japan, US will now work in even closer cooperation

SANKEI (Page 3) (Full)
October 11, 2006


TOKYO 00005902 004 OF 008


By Satoshi Morimoto, professor at Takushoku University Graduate
School of Institute for International Cooperation Studies

North Korea's nuclear test was presumably still in a primitive
stage, so I don't think a full-fledged device was exploded. In order
to enhance the effectiveness, more than one nuclear test is
necessary. A second test will likely take place soon. Following
ballistic missile launches, Pyongyang is pursuing the development of
weapons of mass destruction in defiance of the six-party agreement.
It perhaps believes there are many things to gain by this, and
nothing to lose.

Pyongyang appears to be expecting the United States to capitulate.
But the US instead may aim at "regime change" of the Kim Jong Il
structure. Japan and the US must work in even closer cooperation
than before in order to overcome this nuclear crisis.

The most crucial matter is that if the United Nations Security
Council (UNSC) adopts a resolution in accordance with the UN
Charter's Chapter 7, searches of North Korean ships on the high seas
would be carried out as part of the sanction measures, but (Japan)
has no legal ground for carrying out such inspections.

There is no legal ground for such ship searches, even though under
the Ship Inspection Act, the Maritime Self-Defense Force (MSDF) can
stop and search ships in the event of a contingency in an area
surrounding Japan. If Japan establishes a special measures law and
joins the US in ship searches, which is a part of a naval blockade,
it must anticipate using armed force. I don't think the SDF can take
part in this kind of operation without first either altering the
interpretation of the right to collective self-defense or amending
the Constitution.

On the plan to introduce missile defense, calls to speed up
deployment have been growing stronger since North Korea's missile
launches. But even more important, Japan and the US must first
coordinate their chains of command in preparation for such a joint
operation. We tend to pay too much attention to equipment, for
instance, buying more bullets from the US, but we sidestep how Japan
and the US will actually cooperate in an operation, though that
aspect is critical.

From a different point of view, North Korea's actions can be viewed
as driving us into a corner. Instead of irresponsibly saying, "We
have no way to deal with the North Korean threat," policy makers
must devote themselves to passing legislation that set the proper
rules.

(5) Poll on Abe cabinet, political parties, educational reform,
North Korea, China, South Korea

ASAHI (Page 4) (Full)
October 11, 2006

Questions & Answers
(Figures shown in%age, rounded off. Bracketed figures denote
proportions to all respondents. Parentheses denote the results of a
survey conducted Sept. 26-27.)

Q: Do you support the Abe cabinet?

Yes 63 (63)
No 14 (18)

TOKYO 00005902 005 OF 008



Q: Why? (One reason only. Left column for those marking "yes" on
previous question, and right for those saying "no.")

The prime minister is Mr. Abe 21(14) 11(2)
It's an LDP-led cabinet 19(12) 39(6)
From the aspect of policies 29(18) 40(6)
No particular reason 28(18) 7(1)

Q: Which political party do you support now?

Liberal Democratic Party (LDP) 42 (39)
Democratic Party of Japan (DPJ or Minshuto) 14 (14)
New Komeito (NK) 2 (3)
Japanese Communist Party (JCP) 2 (2)
Social Democratic Party (SDP or Shaminto) 1 (1)
People's New Party (PNP or Kokumin Shinto) 0 (0)
New Party Nippon (NPN or Shinto Nippon) 0 (0)
Liberal League (LL or Jiyu Rengo) 0 (0)
None 33 (35)
No answer (N/A) + don't know (D/K) 6 (6)

Q: Do you think Mr. Abe is a man of ability for prime minister, or
do you otherwise think he's falling behind in his popularity?

He's a man of ability for prime minister 18
He's falling behind in his popularity 56

Q: North Korea proclaimed on the morning of Oct. 9 that it had
conducted an underground nuclear test. Do you feel a threat from
North Korea due to its recent nuclear test? (One choice only)

Feel strongly 44
Feel somewhat 38
Don't feel very strongly 13
Don't feel at all 4

Q: Do you think the international community should pursue dialogue
with North Korea from now on, or do you otherwise think it should
weigh sanctions against that country?

Dialogue 26
Sanctions 62

Q: Prime Minister Abe visited China and South Korea on Oct. 8-9 and
met with their leaders. Do you appreciate this?

Yes 83
No 8

Q: In the Japan-China summit talks, China called for Japan to
resolve the history issue, including the problem of visiting
Yasukuni Shrine. Prime Minister Abe stated that he wouldn't say
whether he would visit there or not. Instead, he answered that he
would like to deal with the problem in an appropriate manner. Do you
appreciate Mr. Abe for this response?

Yes 52
No 33

Q: Do you think Prime Minister Abe's visit to China this time will
improve diplomatic relations between Japan and China?


TOKYO 00005902 006 OF 008


Yes 57
No 25

Q: Then, do you think his visit to South Korea this time will
improve diplomatic relations between Japan and South Korea?

Yes 56
No 26

Polling methodology: The survey was conducted from the evening of
Oct. 9 through the evening of Oct. 10 over the telephone on a
computer-aided random digit dialing (RDD) basis. Respondents were
chosen from among the nation's voting population on a three-stage
random-sampling basis. Valid answers were obtained from 1,023
persons (58% ).

(6) Internet polling: Abe cabinet popular with unaffiliated young
women

TOKYO SHIMBUN (Page 2) (Full)
October 3, 2006

The rate of public support for Prime Minister Shinzo Abe and his
newly inaugurated cabinet was 56.1% in the Tokyo Shimbun's latest
5th Internet poll of monitors on political trends. In the breakdown
of public support for the Abe cabinet, the approval and disapproval
ratings among men were split evenly at 50.0% each. Among women,
however, the approval rating was 63.0%. The Abe cabinet's popularity
among women was overwhelmingly higher than that among men.

Looking at the age brackets of women supporting the Abe cabinet,
those in their 20s marked the highest rate of support at 70.0%.

In the breakdown of women supporting the Abe cabinet into supporters
for political parties, 54.8% of those in their 30s and 51.9% of
those in their 40s answered that they had no political party to
support. In the bracket of those in their 20s, those who have no
party to support accounted for 38.1%. The proportion of women with
no particular party affiliation in these age brackets was higher
than that of women supporting the ruling Liberal Democratic Party in
the corresponding age brackets.

The smart, soft image of Abe seems to have gathered support from
young women who have no party to support.

Meanwhile, the approval rating for the Abe cabinet was below 50%
among men in some age brackets. In particular, among men of Abe's
generation in their 50s, the approval rating for the Abe cabinet was
41.3%, the lowest level among all generations.

In addition, the Abe cabinet's support rate was low among younger
generations, as seen from such figures as 43.8% among those in their
20s and 44.1% among those in their 30s. Abe is giving priority to
his policy of backing up "second chances," and he has shown his
policy course of promoting full-time job opportunities for young
people not in education, employment or training (NEET) and for
part-time jobbers. This, however, does not seem to be very popular
with them.

(7) Business circles hoping for economic exchange to be promoted
between Japan, China, following summit

NIHON KEIZAI (Page 5) (Full)

TOKYO 00005902 007 OF 008


October 9, 2006

The Oct. 8 meeting between Prime Minister Shinzo Abe and Chinese
President Hu Jintao has effectively worked to assuage concern about
the possibility that economic relations between Japan and China
might also become strained. Business leaders are now hoping to see
an expansion of business relations with China, given that country's
sharp economic growth, particularly in the coastal areas, where
there is a potential consumer market. Still, some of the many
companies that have invested solely in China are worried about an
excessive concentration of investment in China.

Concern about deterioration of economic ties with China abated

In response to the Japan-China summit, a welcoming mood is sweeping
across Japan's industrial circles. President Eizo Kobayashi of
Itochu Corporation, which has 67 companies that have invested in
China, stated, "I hope that economic cooperation between Japan and
China will enter a new era." Hitachi issued a statement noting, "We
hope to see the friendship between Japan and China deepen following
the recent summit meeting."

The spreading sense of relief in the business world reflects the
gradually deepening economic interdependence between Japan and
China. According to the Finance Ministry, Japan's total trade with
China, including Hong Kong, topped that of the United States with
China in 2004. An increasing number of Japanese companies are now
eager to invest directly in China, eyeing that country's potential
as a consumer market.

Matsushita Electric Industrial Co. has step up efforts to promote
sales of digital appliances such as flat-screen TVs and large
household appliances in China, setting the target of recording sales
of one trillion yen. The company released a comment saying, "We
anticipate that improvement in Japan-China relations will promote
economic exchange."

President Hitoshi Ogita of Asahi Breweries, who suffered losses
followng the anti-Japanese demonstrations in China last April, said,
"I am looking for progress to be made on the historical issue and on
rights to develop marine resources." Suntory President Nobutada Saji
remarked, "I highly appreciate Prime Minister Shinzo Abe's visit to
China right after the inauguration of his government."

Banks and other financial institutions are expecting to be allowed
to open more branches in China. Since the Koizumi administration was
launched in 2001, Chinese authorities have allowed only Mizuho
Corporate Bank and Mitsui Sumitomo Bank to open branches in Wuxi Shi
and Hangchou, respectively. HSBC of Britain has already been
authorized to open four branches. Some attribute this situation to
former Prime Minister Junichiro Koizumi's visits to Yasukuni
Shrine.

A growing number of Japanese firms, however, are now turning their
attention to countries or regions other than China. This is the
so-called "China-plus-one" trend, which is attributed to a rise in
personnel costs, mainly in coastal regions, as well as an ongoing
review of the preferential tax measures China has introduced for
foreign investors. Some companies are worrying about whether China's
current high economic growth will be long lasting.

Meanwhile, Japan doubled its investment in India in 2005 over the
previous year. Some companies are willing to diversify their

TOKYO 00005902 008 OF 008


investment destinations, with Honda Motor's decision to boost its
production capability in Vietnam by 30% by 2007. An official of the
Japan External Trade Organization's (JETRO) Chinese and North Asian
Affairs Division commented, "Our perception that over-concentrating
investment in China is risky."

(8) Akie Abe, wife of Prime Minister Abe, who speaks Korean, becomes
topic of conversation in Seoul; Reads Korean poem for elementary
school children; Receives great applause from students

SANKEI (Page 6) (Full)
October 11, 2006

Katsuhiro Kuroda, Seoul

Akie Abe, who visited South Korea along with her husband, Prime
Minister Shinzo Abe, was very popular in Seoul. Known for being a
fan of South Korean culture, she has been studying Korean. She
gained popularity among Koreans by showing her ability in that
language.

The First Lady visited an elementary school in Seoul. Attending a
Korean class for students in the second grade, she read out a poem
in Korean from a textbook. Her reading was greeted with applause
from the students and their teacher.

At a dinner party hosted by President Roh Moo Hyun, she enjoyed a
simple conversation in Korean with Kwon Ryang Suk, the president's
wife. Her ability of Korean was noticed and talked about. Mrs. Abe
reportedly has been studying Korean for about three years. The
Korean side gave her high marks, with one saying, "The level of her
Korean is considerably high for a foreigner."

Since it has been reported that Akie is an ardent fan of Korean
culture, Korean people have had a strong interest in her. She was
the center of media attention. In a column titled "Japan's First
Lady's cultural diplomacy" in its issue on Oct. 10, The Dong-A Ilbo
lauded her expected role to ease the strong sentiments of the
peoples of both countries. The newspaper expects her to play such a
role in the future.

SCHIEFFER