JAPANESE MORNING PRESS HIGHLIGHTS 10/13/06

UNCLAS SECTION 01 OF 10 TOKYO 005956

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SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 10/13/06


Index:

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

North Korea nuclear threat:
4) US, Japan pushing for strong UNSC sanctions on North Korea,
trying to persuade China, Russia to follow suit
5) Government plans to speed up introduction of missile-defense
SM-3s next year
6) Government considering special law on rear support for US'
maritime interdictions of North Korea ships
7) Government under pressure to act in case of maritime interdiction

8) Prime Minister Abe: Only natural for Japan to study notion of
having enemy-base strike capability
9) Diet replies on regional contingencies, sanctions on North Korea,
US-Japan alliance and missile defense
10) Minshuto (Democratic Party of Japan) split on Diet actions on
security issues: against extending ant-terror law but would accept
elevating JDA to a ministry
11) Abe was preparing in July for additional sanction measures on
North Korea
12) Low-interest financing for companies hurt by ban on trade with
North Korea

13) Current period of steady economic growth is about to become the
longest in postwar Japan

Articles:

1) TOP HEADLINES

Asahi:
Tokyo High Court orders hospital to pay compensation for baby switch


Mainichi:
Wakayama prefectural government involved in bid-rigging scandal:
Chief cashier and other officials arrested; Osaka prosecutors to
pursue governor's involvement

Yomiuri:
Government now discussing feasibility of refueling US vessels tasked
with ship inspections

Nihon Keizai:
Fukuoka Bank to acquire Kyushu Shinwa Holdings as subsidiary

Sankei:
US does not rule out use of armed force in sanctions resolution on
North Korea likely to be adopted as soon as today

Tokyo Shimbun:
LDP now discussing law on ship inspections; Government examining the
applicability of contingency law

Akahata:
JCP's survey results: Consumer loan firms found to have provided
19.49 million yen to LDP, New Komeito in 2003-2005; Five current
cabinet members received money

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2) EDITORIALS

Asahi:
(1) Japan's unilateral sanctions: International unity first
priority
(2) Newspaper week: We want to tell the readership about importance
of facts

Mainichi:
(1) Japan's unilateral sanctions: Joint action with China, South
Korea essential to enhance effectiveness
(2) Tokyo air pollution suit: Settlement needed for early relief of
victims

Yomiuri:
(1) Sanctions on North Korea: New legislation needed to prepare for
current crisis
(2) Full discharge of debts: We hope for better service from banks

Nihon Keizai:
(1) Four-year-and-nine-month economic recovery? Britain now in its
14th year of growth
(2) Be cautious about oilfield project in Iran

Sankei:
(1) Japan's unilateral sanctions: We support Abe administration's
decision
(2) Return of captain of the boat shot by Russian Coast Guard: This
is not the end of the story

Tokyo Shimbun:
(1) Current expansion ties the longest in postwar era
(2) China's plan to narrow social disparities: Is it possible to
achieve fairness?

Akahata:
Mutual relief: It's unacceptable to smash mutual aid associations

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, October 12

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

08:01
Met Deputy Chief Cabinet Secretary Suzuki at the Prime Minister's
Official Residence (Kantei).

09:00
Upper House Budget Committee meeting.

11:58
Arrived at the Kantei.

13:00
Upper House Budget Committee meeting.

17:04
Met Cabinet Intelligence Director Mitani. Then meeting of cabinet
minister related to monthly economic report.

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18:28
Met State Minister for Economic and Fiscal Policy Ota.

19:00
Received telephone call from Indonesian President Yudohoyono. Chief
Cabinet Secretary Shiozaki and Special Advisors to the Prime
Minister Koike and Seko were present.

19:56
Returned to private residence at Tomigaya.

4) Japan, US launch swift offensive against North Korea at UNSC with
harsh sanctions

YOMIURI (Page 2) (Excerpts)
October 13, 2006

Yoshikazu Shirakawa, New York

The United States circulated a final draft resolution calling for
sanctions against North Korea for its nuclear test to the permanent
member nations of the United Nations Security Council on Oct. 12.
The US revised the original draft to reflect the concerns of China
and Russia. By coming up with a final draft resolution calling for
harsh sanctions under Chapter 7 of the UN Charter, the US
demonstrated its determination to bring about powerful, swift action
from the UNSC. China and Russia now have no excuse for opposing the
heightening of pressure on North Korea for its provocative act,
losing ground to the quick offensive taken by Japan and the US.

Speaking to reporters on the evening of Oct. 11, Ambassador to the
UN John Bolton indicated a willingness to accelerate procedures for
adopting the resolution, saying, "Although we are ready to respond
to further discussion, it is necessary to take quick action tomorrow
(the 12th) in order to have the resolution adopted by the weekend."

The US has constantly taken the initiative at the UNSC in dealing
with the issue of North Korea's nuclear test. Within 24 hours after
the North announced it had conducted a nuclear test, the US
presented a draft resolution calling for sanctions. While China and
Russia were reserving a reply, the view that "a tough resolution
should be quickly taken" dominated the UNSC.

The resolution includes wide-ranging measures, such as ship
inspections, a ban on arms exports, and financial sanctions, in
addition to measures to prevent the transfer of weapons of mass
destruction. These measures show that the US had started carefully
drafting the resolution even from before the North conducted the
nuclear test.

In the final version, the words "within 30 days" inserted in the
draft resolution as the deadline for implementing sanctions were
erased, reflecting the proposals by China and Russia to some
extent.

5) Gov't to introduce SM-3 missiles next year for
earlier-than-scheduled deployment

ASAHI (Page 4) (Full)
October 13, 2006


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In the wake of North Korea's proclamation of a nuclear test, the
government decided yesterday to frontload its planned introduction
of sea-based Standard Missile 3 (SM-3) missiles for missile defense
(MD) and will introduce the SM-3 earlier than scheduled within the
calendar year of 2007, Defense Agency Director General Kyuma stated
before the House of Councillors Budget Committee in its meeting
yesterday. Japan's SM-3 introduction was initially scheduled for
late fiscal 2007.

Asked about MD deployment, Prime Minister Abe vowed to expedite
Japan's MD deployment. "The budget is limited, but we would like to
make efforts to push for it in response to such a situation," Abe
stated in his reply before the committee. Kyuma also stated that the
government would have to consider moving up the schedule in order to
remove public anxiety. He then clarified that the Defense Agency
would introduce the SM-3 within 2007. They were replying to
questions from Jiro Aichi of the ruling Liberal Democratic Party.

Meanwhile, in response to North Korea's missile launches in July,
the government has already decided to move up its planned
acquisition of ground-based Patriot Advanced Capability 3 (PAC-3)
missiles for earlier-than-scheduled deployment. The government plans
to purchase PAC-3 missiles in fiscal 2008 and afterward but will
purchase some of them in fiscal 2007.

6) Government eyes special law for rear support for maritime
interdictions

ASAHI (Page 1) (Full)
October 13, 2006

The government yesterday launched a discussion on special
legislation to enable the Self-Defense Force to offer rear support
for ship inspections being carried out on vessels traveling to and
from North Korea. The rear support would focus on fueling and other
services. The United Nations Security Council will soon adopt a
resolution calling for sanctions against North Korea because of its
announced nuclear test. Japan expects the resolution will include a
ship-inspection measure. The Liberal Democratic Party also asked the
government yesterday to prepare special legislation to enable
Japan's rear support for such maritime interdictions.

In a House of Councillors Budget Committee meeting yesterday, Prime
Minister Abe said, "Assuming various contingencies, we must look
into what measures Japan will be able to take." An aide to the prime
minister also admitted that the government started a discussion on
response measures, including a special law, and said, "The prime
minister should make a final decision."

Under the current relevant law, the Maritime Self-Defense Force
(MSDF) is allowed to carry out its own ship searches on the high
seas on the condition that there is a contingency going on near
Japan. The government, however, has judged it difficult to come up
with this definition under the current situation. Regarding
rear-support fueling services as stipulated in the Regional
Contingency Law, as well, such services are limited to the US
military and they must occur in Japan's territorial waters. Given
this, the government has started mapping out a special law.

In a meeting yesterday of the Policy Research Council to Deal with
North Korea's Nuclear Test, the LDP also called for legislation to
be prepared to allow Japan to support maritime interdictions being

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carried out by vessels of other countries.

Defense Agency Director General Kyuma said in the Upper House Budget
Committee meeting yesterday:

"Nobody knows what would happen when countries begin to take action
in accordance with the UN resolution. There is even the possibility
that areas near Japan might fall into a state that can be recognized
as an emergency."

7) UNSC resolution on maritime inspections: Government forced into
difficult choice; Recognizing contingency key to support

TOKYO SHIMBUN (Page 2) (Slightly Abridged)
October 13, 2006

Maritime inspections of ships to ensure enforcement of economic
sanctions can involve the use of force, such as firing warning shots
and seizing ships. Though the government has thus far characterized
such actions an unconstitutional, the United Nations Security
Council (UNSC) is now discussing inspections of ships to and from
North Korea. Following these moves, the possibility has emerged that
the Abe administration will be forced to steel itself for the
challenge and make a difficult choice.

In the event of the UNSC incorporating maritime ship inspections in
its resolution, options available to Japan in compliance with the
existing law will be: (1) carrying out ship inspections; (2)
providing logistical support; or (3) not taking part in such
inspections. The circumstances are, however, complex.

International law defines maritime inspections as naval ships
stopping vessels and checking whether they are transporting banned
good. If the vessel does not follow the order to stop, warning shots
might be fired. If banned goods are found, the vessel could be
seized.

Based on the interpretation that firing warning shots and seizing
vessels fall under the use of armed force or the threat to do so,
acts banned under Article 9 of the Constitution, the government has
thus far taken the position that maritime inspections of ships are
unconstitutional.

For this reason, Japan has established the Vessels Inspection
Activities Law, which allows it to board and inspect the vessels of
third countries in the event of a contingency in an area surrounding
Japan, thereby positioning such an act as replacing conventional
naval inspections.

However, doubts have been cast about the efficacy of this kind of
ship search, because unlike naval inspections, firing warning shots
is not allowed. They have no power of coercion, either.

That is why the range of options available to Japan includes
providing logistical support to US military vessels carrying out
maritime inspections of ships.

However, in both cases the government needs to recognize a
contingency in an area surrounding Japan before the Maritime
Self-Defense Force can operate.

The Law Concerning Measures to Ensure the Peace and Security of

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Japan in Situations in Areas Surrounding Japan stipulates a
contingency in an area surrounding Japan as a situation that could
lead to a direct armed attack if it is left unheeded. As to whether
that would include the current situation, the prevailing view in the
Defense Agency (JDA) was at first that the situation was not that
serious, according to a senior JDA official.

However, the situation has changed due to sanctions discussions by
the UNSC.

There are six categories for the recognition of a contingency in an
area surrounding Japan, including the outbreak of an armed conflict
or the acts of a specific country being determined by the UNSC to be
a threat to peace and the subject of economic sanctions. In North
Korea's case, there is the possibility of that maritime inspections
of ships could lead to an exchange of fire. There is also a growing
consensus that the UNSC's sanctions resolution following North
Korea's announcement that it has carried out a nuclear test falls
under some of those six categories.

8) Attack on enemy bases: "Considering such a possibility is
natural," says prime minister; JDA director general remains
cautious

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

Regarding Japan's response in the event of an imminent missile
launch against Japan, Prime Minister Abe during yesterday's Upper
House Budget Committee meeting stated, "It is only natural for us to
always consider and study what should be done in order to defend out
country." He thus indicated his position supporting study of the
idea of obtaining the capability to strike enemy bases.

At the same time, Defense Agency Director-General Akio Kyuma
expressed caution about the use of force, noting: "Our country's
position has been that it uses a shield but does not possess arms.
We will, in principle, relegate the job of attacking enemy bases to
the US military."

9) Abe: Japan to enforce sanctions due to growing threat from North
Korea; Japan-US alliance's deterrence rock solid

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

The following is a gist of Diet interpellations from yesterdays'
House of Councillors Budget Committee session.

Situations in areas surrounding Japan

Keiichiro Asao (Democratic Party of Japan-Minshuto): Does North
Korea's conduct this time fall under the category of "situations in
areas surrounding Japan" as a legal grounds for ship inspection?

Prime Minister Abe: The situation is changing every moment, so we
will have to consider at all times how Japan can respond while
anticipating every possible situation.

Defense Agency Director-General Kyuma: I don't think the present
situation falls under the category of situations in areas
surrounding Japan. However, when various countries are beginning to

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take actions in line with a United Nations resolution, circumstance
may emerge that require recognition as a situation (i.e., a
contingency) in areas surrounding Japan.

Abe: Even if the circumstances are recognized as a situation in
areas surrounding Japan, there are limits to the enforcement of ship
inspections. At this point, we will need to consider how to respond
to such a situation in the international community. That's a major
challenge.

Sanctions

Asao: Japan is asking the United Nations Security Council to adopt a
resolution, but Japan will not participate (in maritime intercept
operations). Do you think this will pass muster in the international
community?

Abe: One may say Japan can't do anything in light of its law, so we
don't recognize it (as a contingency) and we don't agree (to
participate in maritime interdictions). That's another problem. Each
country has its own capability.

Katsutoshi Kaneda (Liberal Democratic Party): Why did the government
decide to go ahead with unilateral sanctions?

Abe: North Korea has improved its missile capability and proclaimed
that it conducted a nuclear test. When we think about this, Japan is
facing a doubly serious threat. It's a threat to the region. At the
same time, Japan is the very country facing the threat. In such a
situation, the government decided on severe measures.

Japan-US alliance

Gotaro Yoshimura (LDP): If and when Japan faces an increasing danger
of a nuclear attack, how will the government respond?

Abe: The United States has declared that an attack on Japan is the
same as an attack on the United States. The presence of the United
States and the deterrence of our alliance with the United States are
rock solid. When I talked with President Bush over the phone, the
president told me that US deterrence is rock solid. It's a message
to North Korea and the world.

Missile defense

Jiro Aichi (LDP): We will have to consider destroying missiles as an
emergency option within the bounds of invoking the right of
self-defense.

Abe: I take it for granted that we will always discuss and study
what to do in order to defend our country. We've now already set
about missile defense. The budget is limited, but I'd like to make
efforts to push for it in response to such a situation.

Aichi: What about the government's plans for missile defense?

Kyuma: The MD deployment plans have been budgeted since fiscal 2004
and will be completed in eight years. The SM-3 (sea-based missiles
to be mounted on Aegis ships) is currently scheduled to be
introduced in late fiscal 2007, but I'd like to do it within (the
calendar year of) 2007.


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10) Minshuto's security policy now wavering, with opposition to
extension of Antiterrorism Special Measures Law but favoring
upgrading JDA to ministerial status

SANKEI (Page 5) (Full)
October 13, 2006

North Korea's recent announcement that it set off a nuclear test not
only puts to the test the government's security policy but also
rocks the Democratic Party of Japan's (Minshuto) security policy.
Yesterday, the party adopted a policy course of opposing an
amendment to the Antiterrorism Special Measures Law, but DPJ
President Ichiro Ozawa supports a bill to upgrade the Defense Agency
(JDA) to ministry status. The party's Policy Committee to Take the
Reins of Government held its first meeting yesterday, but it is
unlikely to reach a decision on basic policy until the end of the
year, while being forced until then to deal with bills in an ad hoc
manner.

The Antiterrorism Special Measures Law serves as the legal grounds
for refueling by the Maritime Self-Defense Force (MSDF) now
continuing in the Indian Ocean for US and other countries' vessels.
As that law is due to expire on Nov. 1, the government has submitted
to the Diet a bill extending the law for another one year. The Lower
House Steering Committee in its board meeting yesterday decided to
have the government explain the purpose of the bill and take
questions at a plenary session today.

Meanwhile, Minshuto in its Foreign and Defense Council meeting
yesterday confirmed a policy course of opposing the bill, saying
that continuing to extend it piecemeal and that the GOJ has yet to
sufficiently explain what the law has accomplished. There is,
however, deep-rooted sentiment within the party in favor of a
realistic approach, with one junior lawmaker warning, "That would
give the impression that our party has turned its back on fighting
terrorism."

When the same law was amended last year to extend it for one year,
then DPJ President Seiji Maehara worked to coordinate views in the
party so as to approve the amendment, but he changed course
afterward to oppose it in order to preserve harmony within the
party. The party's stance this time is to save face, with a
mid-level lawmaker noting: "Given that our party has opposed the
bill to date, if we now come out in favor of it, our policy
consistency will be called into question."

At the same time, upgrading the JDA to ministerial status has been
one of Ozawa's pet arguments continued since he was the president of
the Liberal Party (Jiyuto). In fact, Ozawa stated on a commercial TV
program in late September: "It's not a good thing that the agency in
charge of national defense is under the Cabinet Office and is unable
to take the initiative in making policy proposals."

Yesterday, the party's Parliamentary Group Aiming to Establish a
Defense Ministry at an Early Date met yesterday and confirmed that
the group endorsed upgrading the JDA to a ministerial status. But
some lawmakers are opposed, citing the bid-rigging scandals
involving the Defense Facilities Administration Agency and arguing
that promotion to ministry status would only reward the JDA after
this malfeasance. So, at the Foreign and Defense Council meeting
yesterday, the party put off the conclusion.


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In response to North Korea's announcement of a nuclear test, Ozawa
said on Oct. 9: "We must take strict containment measures." Adding,
"North Korea will react (to the measures taken by the international
community)," he called on the government to take a resolute
response. But when the government announced a set of additional
sanctions on Oct. 11, the party did not issue an official statement.
Ozawa and his party are now being tested over whether party members
can unite on security policy.

11) Prime Minister preparing additional sanctions measures against
North Korea from July, decision given momentum by change in China's
attitude

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

In the background of the government's decisions to impose on its own
additional sanctions measures against North Korea only two days
after that country announced it had carried out a nuclear weapon
test lies the fierce determination of Prime Minister Abe, who
decided to take a strong stand as quickly as possible. The Prime
Minister already in July (before his election) had anticipated such
a crisis situation, and directed related bureaus to start
preparations.

"North Korea's next card is likely to be a nuclear test, so I want
you to start considering our response should that contingency
occur," Abe, then chief cabinet secretary, directed Deputy Assistant
Chief Cabinet Secretary Ando, who was in charge of foreign affairs,
only a few days after North Korea launched missiles on July 5.

12) Government helps domestic firms suffering from embargo against
North Korea, plans to extend low-interest loans

SANKEI (Page 5) (Full)
October 13, 2006

At the first meeting yesterday of the government's task force on an
embargo on North Korea (chaired by Chief Cabinet Secretary Yasuhisa
Shiozaki) at the Prime Minister's Official Residence (Kantei),the
government decided to take such measures as extending low-interest
loans via government-affiliated banking institutions to domestic
firms suffering an economic blow from a total import ban on North
Korean products. The government will today decide on assistance
measures to be taken immediately.

The total import ban on North Korean products is one of Japan's
additional sanctions. Such measures were announced on Oct. 11 and
will be put into action tomorrow. In the meeting, Shiozaki stated,
"They are necessary for the sake of security, but we want to offer
considerate assistance to firms that have suffered a blow." He
received reports forecasting the impact as well as suggesting
assistance measures from relevant ministries and agencies, including
the Ministry of Agriculture, Forestry, and Fisheries and the
Ministry of Economy, Trade, and Industry.

Imports from North Korea for fiscal 2005 amounted to some 14.5
billion yen. Of them, seafood, such as crabs and clams, accounted
for 28% or so, and matsutake mushrooms and other agricultural
products accounted for about 12% .

13) Monthly economic report: Period of current expansion stretches

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to 57 months, as long as "Izanagi boom"

SANKEI (Page 1) (Excerpts)
October 13, 2006

The current economic expansion is equal to the "Izanagi boom"
(November 1965 - July 1970),and it is almost certain that it will
be the longest postwar boom next month. State Minister in Charge of
Economic and Fiscal Policy Hiroko Ota submitted the October economic
report in a meeting of relevant cabinet ministers yesterday. The
report left unchanged the government's basic assessment of the
economy as "being on the recovery track." The current economic
expansion that began in February 2002 has stretched to 57 months.

SCHIEFFER