JAPANESE MORNING PRESS HIGHLIGHTS 11/02/06

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SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 11/02/06


Index:

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

Six-party talks resurrected:
4) Prime Minister Abe: Sanctions against North Korea will stand
until abduction issue resolved
5) UN Ambassador Bolton tells visiting association of abducted
Japanese, "President Bush is your friend"
6) US, Japan alert to make sure that with restart of 6-party talks
with North Korea, encirclement net still tight, but China, ROK see
otherwise
7) US, Japan to require North Korea to make statement of abandonment
of nuclear ambitions
8) Tokyo to continue own sanctions on North Korea while seeking
parallel talks with Pyongyang at 6-party talks

9) President Bush, Prime Minister Abe's summit meeting set for Nov.
18 during APEC conference

10) Rush of African leaders visiting Japan

Okinawa gubernatorial election:
11) Minshuto head Ozawa to campaign in Okinawa on behalf of
gubernatorial candidate Itokazu
12) Nakaima gubernatorial candidate wants Futenma moved to Miyako
Island, but locals disagree
13) Ginowan City campaigning about the danger to lives of Futenma
Air Station

Defense and security affairs:
14) JDA chief Kyuma: Time has come to revise Article 9 of
Constitution
15) Minshuto (Democratic Party of Japan) split over JDA upgrade
bill, with over 50 members wanting to vote yes but party saying no
due to Okinawa election
16) Ruling camp increasing upset by LDP policy chief Nakagawa who
will not stop making daily appeals for a nuclear option debate

Policy agenda:
17) Heizo Takenaka, no longer a lawmaker, to return to Keio
University as professor
18) Looks likely now that the controversial educational reform bill
will be passed this session
19) Prime Minister Abe intends to put major effort into developing
bio-energy fuel source for Japan
20) Next year's budget will hold issuance of deficit bonds to below
27 trillion yen

Articles:

1) TOP HEADLINES

Asahi, Mainichi, Yomiuri & Tokyo Shimbun:
Bailout for high school seniors; students need to take about 50
lessons for graduation

Nihon Keizai:
Financial Services Agency, Bank of Japan to scrutinize regional
banks' exposure to risk assets

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Sankei:
North Korean soldier deployed in Chinese border: I am proud of
success of nuclear test

Akahata:
Cabinet Office admits it held "fake" town meeting on Basic Education
Low revision bill in Aomori Prefecture, asked prefectural board of
education to support legislation

2) EDITORIALS

Asahi:
(1) Six-party talks: First prevent the North Korea issue from
worsening
(2) School bullying: Let's provide "evacuation areas" to students
suffering from bullying

Mainichi:
(1) Bailout for high school students: Drastically Review university
entrance exam system
(2) Shifting revenue for road construction to the general budget is
must

Yomiuri:
(1) Problems of high school education
(2) Handicapped people's baseball game should be first step to open
the door for international games

Nihon Keizai:
(1) Child consultation centers must be aware of child abuse
(2) Wakayama Governor's responsibility is serious

Sankei:
(1) Six-party talks: Don't allow North Korea to buy time
(2) Earthquake-proof data falsification: Don't let the scandal be
watered down

Tokyo Shimbun:
(1) Six-party talks: North Korea, don't turn back!
(2) Defective goods: Consumers might lose confidence in "brands"

Akahata:
Iraqi situation: Occupation forces deepen crisis

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, November 1

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

09:51
Met at LDP headquarters with Lower House members Zentaro Kamei and
Taro Kono, joined by Secretary General Nakagawa.

10:05
Met Policy Research Council Chairman Nakagawa.

10:33
Met at Kantei with former Ambassador to Thailand Hisahiko Okazaki.


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11:44
Gave an interview to the Wall Street Journal.

12:22
Met Deputy Chief Cabinet Secretary Suzuki, followed by MAFF Minister
Matsuoka.

13:54
Attended a national memorial service for the police officers who
died in line of duty, held at Grand Arc Hanzomon.

15:32
Met at Kantei with Vice Foreign Minister Yachi and Foreign Policy
Bureau chief Kono. Kono stayed on.

16:13
Met Economic and Fiscal Policy Minister Ota, advisor Nemoto,
Assistant Deputy Chief Cabinet Secretary Saka, and others.

17:21
Met Chief Cabinet Secretary Shiozaki in the presence of Saka.

18:14
Met Tanzanian President Kikwete. Afterward hosted a dinner party for
the president.

20:54
Returned to his residence in Tomigaya.

4) Prime Minister Abe: "Japan will continue sanctions until
abduction issue is resolved"

YOMIURI (Page 2) (Full)
November 2, 2006

Prime Minister Abe, when asked yesterday about what to do about
Japan's own sanctions against North Korea in response to its
agreement to rejoin the six-party talks, stated: "Japan has imposed
sanctions (on North Korea) for its missile launches and nuclear
test, as well as its insincere attitude toward the abduction issue.
Unless those issues are resolved, we won't remove the sanctions." He
thus indicated he would continue the sanctions unless there is
progress on the abductions and other issues. He was replying to
reporters at the Prime Minister's Official Residence.

Asked about sanctions under the United Nations Security Council
resolution, Abe pointed out: "The resolution calls on North Korea to
scrap its nuclear weapons. Unless that country does so, the
sanctions will not be relaxed or be removed." He continued to add,
"As a member of the six-party talks, Japan will work together with
other members to call on North Korea to abandon its nuclear
programs." He thus emphasized he would work in close cooperation
with member nations, such as the United States, China, and South
Korea.

5) US Ambassador to UN Bolton tells kin of Japanese abductees, "The
US president is your ally," ensures cooperation with Japan

SANKEI (Page 2) (Excerpts)
November 2, 2006

Ryosuke Sumii, New York

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Members, now visiting the United States, of the Association of the
Families of Victims Kidnapped by North Korea (Family Association)
and its supporting group National Association for the Rescue of
Japanese Kidnapped by North Korea (Rescue Association) yesterday
afternoon (early hours yesterday, Japan time) met with US Ambassador
to the United Nations John Bolton. Bolton. He told them, "President
Bush is your ally. We'll pursue specific approaches from now on, as
well." He went on to say, "If you consult with the Japanese
government whatever it may be, it will be relayed immediately to
us," promising them even more efforts and cooperation with Japan in
order to resolve the abduction issue.

Family Association members asked Bolton that when another sanctions
resolution is adopted at the UN Security Council (UNSC),"abductions
of foreign nationals" should be added to the reasons for the
resolution. Bolton told them, "Resolution 1718 adopted by the UNSC
(in the wake of North Korea's nuclear test) referred to (the
abduction issue) with the expression 'humanitarian concerns.' This
is the starting point. We'd like to advance from it in the future,"
coming up with a positive stance to get another resolution adopted.

6) 6-party talks to resume; Japan, US to keep tabs on North Korea

NIHON KEIZAI (Page 2) (Abridged)
November 2, 2006

WASHINGTON-North Korea has now agreed to rejoin the six-party talks
over its nuclear arsenal. The talks will be resumed along with the
implementation of the United Nations Security Council's sanctions
resolution against North Korea's recent nuclear test. The UNSC
resolution requires UN members to come up with their follow-up
reports on their sanctions by Nov. 13, or 30 days after the UNSC's
adoption of the resolution. The United States is concerned about the
international community's net around North Korea loosening and is
poised to continue its sanctions apart from resuming the six-party
talks. Japan will stay in step with the United States. Meanwhile,
China and South Korea are strongly inclined to hail North Korea's
agreement to return to the talks in and of itself as a positive
development. The countries concerned differ in their views.

US Secretary of State Rice has shown her outlook, indicating that
the six-party talks would be resumed after a Nov. 18-19 summit
meeting of the Asia-Pacific Economic Cooperation (APEC) forum. The
countries concerned were first expected to meet early this month.
However, the talks will be held late this month at the earliest.

The UNSC has set up a sanctions committee based on its sanctions
resolution, and the committee is now working to detail sanctions. UN
member countries are mandated to follow up and report their
sanctions in 30 days. This deadline, however, is not strict. So the
six-party talks will almost coincide with the sanctions committee's
evaluation.

The United States is poised to steadily carry out its sanctions. On
Oct. 30, Rice reiterated an embargo on luxury items in particular.
Rice explained its effectiveness, recounting that it will directly
hit the regime that is eager for luxury items while people in North
Korea need humanitarian aid. In order to hold fruitful talks, the
United States needs to make preparations for a while before resuming
the six-party talks.


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7) Japan, US to demand N. Korea declare it will abandon nuclear
programs as soon as possible after the six-party talks are
restarted

YOMIURI (Page 1) (Full)
November 2, 2006

The Japanese and US governments yesterday decided to demand that
North Korea declare its determination to completely abandon its
nuclear programs as soon as possible after the six-party talks are
resumed. Tokyo and Washington are expected to call on Pyongyang to
announce it will immediately put an end to nuclear testing and come
up with a road map detailing a timetable for the abandonment process
and a method of verification, for example. The two governments will
begin working-level coordination with concerned countries, such as
South Korea, starting early next week.

In order to resume the six-party talks as quickly as possible, Tokyo
and Washington have agreed on the perception that the resumption of
the talks is not premised on the North's declaration that it will
completely abandon its nuclear programs. Meeting the press
yesterday, Chief Cabinet Secretary Shiozaki indicated that priority
was given to resuming the talks and said: "It's important for the
North to rejoin the talks unconditionally. The important thing is
what will be discussed in the talks."

8) Japan to look for ways to restart Japan-DPRK comprehensive and
parallel talks while continuing sanctions

SANKEI (Page 3) (Excerpts)
November 2, 2006

In response to North Korea's agreement to rejoin the six-party talks
to discuss its nuclear issue, the government yesterday began
considering restarting the Japan-North Korea comprehensive and
parallel talks, a format to discuss the three issues -- abductions,
normalization of diplomatic ties, and nuclear weapons and missiles
-- together. The first round was held in Beijing in February of this
year, but no prospect for the next round is in sight even now. The
government intends to look for ways to have a direct dialogue with
North Korea, taking advantage of the resumption of the six-party
talks, but it remains to be seen whether the North will respond to
Japan's request.

When asked about the bilateral talks, a government official
yesterday stated: "Assuming a number of possibilities, we are making
preparations." In the first round of the talks in February, Japan
demanded a full account of the abduction issue and called on the
North to hand over the kidnappers to Japan, but the North did not
shift its position, arguing that the abduction issue was already
resolved. The talks ended without any progress.

For the government, the six-party talks and the bilateral talks are
the two wheels of a bicycle, so it wants to use the resumption of
the six-party talks to create momentum for reaching a solution to
the priority issue of the abductions.

At a press conference yesterday, Chief Cabinet Secretary Yasuhisa
Shiozaki indicated a plan to ask other members of the six-party
talks to discuss the abduction issue during the session, saying: "We
have strongly called for discussion on the abduction issue in the
six-party talks. Our policy line remains unchanged."

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However, an official in charge of government negotiations stated:
"We've no idea whether North Korea is serious about sitting down for
dialogue. We need to see how it will behave."

9) First Abe-Bush summit set for Nov. 18

MAINICHI (Page 5) (Full)
November 2, 2006

The first summit between Prime Minister Shinzo Abe and US President
George W. Bush will be held on Nov. 18 on the sidelines of the
Asia-Pacific Economic Cooperation (APEC) forum in Vietnam. The plan
has been finalized through coordination by the two governments. The
two leaders are expected to discuss, among other things, their
responses to the six-party talks on the North Korean nuclear issue.

10) Succession of African leaders to visit Japan on occasion of
Beijing forum

MAINICHI (Page 5) (Abridged slightly)
November 2, 2006

Prime Minister Shinzo Abe met with Tanzanian President Kikwete at
his official residence yesterday. He also had a meeting with
President Nguema of Equatorial Guinea on October 31. Two African
presidents and five foreign ministers are also scheduled to visit
Japan from this week through next week. An usually large number of
African leaders are scheduled to visit Japan.

The lineup includes the presidents of Rwanda and Ghana and the
foreign ministers of the Republic of Congo, Mozambique, Lesotho,
Kenya, and Sudan. In his meeting with Kikwete yesterday, Abe said,
"Defining Tanzania as a key country in Africa, we will assist your
country." A succession of African leaders will stop in Japan at
Tokyo's request on the occasion of the China-Africa Cooperation
Forum to be held in Beijing on Nov. 3. "We don't want to see them
brainwashed by China. They should hear Japan's views, as well," a
Foreign Ministry official said.

11) Okinawa to kick off gubernatorial election today; Ozawa visits
Okinawa

TOKYO (Page 2) (Full)
November 2, 2006

Ichiro Ozawa, president of the leading opposition Democratic Party
of Japan (Minshuto),arrived yesterday in Naha City, Okinawa
Prefecture. He there visited local opposition parties and local
companies at their offices to discuss the Nov. 19 gubernatorial
election to be announced today.

In campaigning for the gubernatorial election, five opposition
parties-the DPJ, the Japanese Communist Party, the Social Democratic
Party (Shaminto),the Liberal League (Jiyu Rengo),and the Okinawa
Socialist Masses Party (Okinawa Shadaito or OSMP for short)-are
united against the ruling coalition of the Liberal Democratic Party
and the New Komeito, and have sponsored as joint candidate Keiko
Itokazu, who is currently seated on the House of Councillors in the
Diet and will run as an independent new candidate. An Okinawa-based
conservative political group, Sozo (or the "Political group of
OKINAWA revolution" as its official English name),will also back up

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Itokazu.

Ozawa visited the JCP, SDP, OSMP, and Sozo at their respective
offices and also called at Itokazu's campaign headquarters.

Ozawa met with Itokazu at her local office and encouraged her,
saying: "I'm glad that we can pull together. Let's make sure you
win."

Ozawa will visit Japan's westernmost island of Yonagunijima in the
Okinawa prefectural town of Yonaguni and will also visit Japan's
southernmost inhabited island of Haterumajima in the Okinawa
prefectural town of Taketomi to ask local residents to support
Itokazu.

12) Gubernatorial candidate Nakaima suggests relocating Futenma base
to Miyakojima, encountering local objections

AKAHATA (Page 4) (Excerpt)
November 2, 2006

Hirokazu Nakaima, who is the candidate jointly backed by the Liberal
Democratic Party and the New Komeito in Okinawa gubernatorial
election, has come out with a statement concurring with the
relocation of Futenma Air Station to another location in the
prefecture, stating that consideration be given to Shimoji Island
Airport (Miyakojima City),This statement has produced a fierce
protest from the residents of Miyakojima.

On the other hand, words of welcome came from Defense Agency
Director General Kyuma, representing the Japanese government, at his
regular press conference on Oct. 31.

13) Ginowan City issues Declaration of Safety Inadequacy that calls
Futenma Air Station a threat to peoples' lives

AKAHATA (Page 4) (Full)
November 2, 2006

The city of Ginowan in Okinawa Prefecture that houses the US
Marines' Futenma Air Station yesterday issued a Declaration of
Safety Inadequacy of Futenma Air Station that cited the base for
continuing to be a threat to the lives and property of local
residents and as having fallen below the safety standards of the US
armed forces. In a press conference at city hall, Mayor Yoichi Iha
made the announcement.

According to safety standards set by the US armed forces, the Clear
Zone for an airfield of the size of Futenma Air Station should be
900 meters on each side of the runway, and the Accident Potential
Zone or APZ is to be set at a scale of 3,600 meters from each side
of the runway.

Mayor Iha pointed out that the Clear Zone of Futenma Air Station
contains a primary school, kindergarten, crowded shopping streets
and the like, none of which are in accordance with US military
safety standards. He sharply criticized the situation, stating; "The
Japanese and US governments have covered up the dangerous nature of
Futenma Air Station."

In addition, he stated: "The helicopter crash in a city university
campus two years ago can be said to have demonstrated the

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inevitability of an accident occurring while operating in such a
dangerous environment. We can never accept the operation of a base
that ignores the safety and lives of the local residents in this
way." He sought the immediate closure and return of the base.

14) It's time to rewrite Article 9: Kyuma

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

Defense Agency Director General Fumio Kyuma, sitting on the House of
Representatives Security Affairs Committee in its meeting yesterday,
suggested the need to rewrite Article 9 of the Constitution, which
stipulates Japan's maintenance of no war potential. "I think it's
about time to change it," Kyuma stated before the committee. As an
example, Kyuma took up the case where the Self-Defense Forces
participate in a United Nations force. "I wonder if Japan can do
what other countries are doing," Kyuma stated. "Sometimes we may
have to say we can't do so because we have constitutional
provisions," he added.

15) Minshuto split over bill designed to raise JDA to ministry
status

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

In Minshuto (Democratic Party of Japan),views are split over
whether to support a bill designed to raise the Defense Agency (JDA)
to ministry status. In the House of Representatives Security
Committee, intensive deliberations on collusive bidding at the
initiative of JDA were started yesterday and will last until Nov. 7.
The ruling camp intends to take a vote on the bill on Nov. 10 after
the deliberations. But Minshuto is now in a quandary, as a junior
conservative member said, "If a vote is taken before our party
determines its stance on this historical bill, we will result in
acting disgracefully."

The Diet Affairs Committee chairmen of Minshuto, the Japanese
Communist Party (JCP),the Social Democratic Party (SDP),and the
People's New Party met in the Diet building yesterday and conferred
on how to respond to the controversial bill. The JCP and the SDF
proposed working together against the bill, but the Minshuto
representative only said, "We will decide on our stance while
watching the contents of the intensive deliberations." The People's
New Party decided to support the bill after the meeting.

In negotiations over deliberations on the bill, the ruling camp
accepted Minshuto's proposal for three-day intensive talks before
starting discussions. Minshuto member Yukichi Maeda argued in
yesterday's meeting, "If a decision is made to raise the JDA to a
ministry, the details (of the bid rigging scandals involving the
agency) must be uncovered first." But the ruling bloc aims to take a
vote at an early date, as a senior member of the Liberal Democratic
Party's Diet Affairs Committee said, "Two days are enough for
discussing the bill after the intensive deliberations are over."

The Minshuto executive has judged it better to maintain cooperation
with the JCP and the SDP in the Diet until the Okinawa gubernatorial
election on Nov. 19 in order to ensure cooperative campaigning among
the opposition parties. In the party, however, "there are at least
50 members willing to vote for the bill," a mid-ranking member said.

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If the party pushes ahead with a stance against the bill despite
such a situation, a number of members will undoubtedly rise in
rebellion. The party now remains unable to discuss the issue even at
a joint meeting of its foreign and defense councils.

16) Nakagawa's nuclear-debate argument escalating due to Abe's
silence; Ruling coalition may be thrown into turmoil

MAINICHI (Page 5)(Full)
November 2, 2006

LDP Policy Research Council Chairman Shoichi Nakagawa has repeatedly
made statements about a nuclear option for Japan. He has argued that
according to the government's interpretation of the Constitution,
nuclear weapons are included in minimum necessary armaments, while
underlining the country's stance of upholding the three nonnuclear
principles, leaving the impression that there no longer exist
constraints on nuclear debate helped by Prime Minister Abe's
"silence." But Nakagawa's convincing words and deeds have resulted
in strong anxieties even in the ruling coalition. An escalation of
his comments may throw the government and the ruling bloc into
confusion.

"If we don't discuss the matter now, which has not been debated,
when can we do so? Now that the other side (North Korea) has used a
card it had never used before, we have no other option but to
discuss going nuclear."

Nakagawa held a press conference at the Japan National Press Club
yesterday in which he discussed Japan's nuclear option for 45
minutes, one-third of the total time.

Everything started with an Oct. 15 television program in which
Nakagawa said, "Debating nuclear weapons is one of the options."
This drew criticism from opposition parties. On Oct. 18, Foreign
Minister Taro Aso echoed Nakagawa by saying before the Lower House
Foreign Affairs Committee, "Discussion is important." Encouraged by
Prime Minister Abe's comment that freedom of speech must not be
suppressed, Nakagawa appears to have no intention of holding his
tongue.

Abe, however, declared in a speech in Tokyo on Oct. 27, "The
government and LDP panels will not discuss the matter." Nakagawa has
made the controversial remarks as LDP policy chief, but Abe has
defended him as having made the comments in a "private capacity."
This seems to have helped lower the hurdle for a nuclear debate.

In the meantime, former LDP Vice President Taku Yamasaki said in a
strong tone at his faction meeting yesterday: "At a time the country
is taking sanctions against North Korea following its nuclear test,
discussing a nuclear option is utterly inappropriate. Debate must be
blocked." New Komeito leader Akihiro Ota also objected to nuclear
debate yesterday, noting: "A person in a key government or ruling
party position must not discuss the matter." But Nakagawa does not
seem to care such advice. The floor for a nuclear debate is
expanding.

17) Heizo Takenaka to return to Keio University

YOMIURI (Page 2) (Full)
November 2, 2006


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Heizo Takenaka, 55, who served as minister of internal affairs and
communications in the Koizumi government, will come back to Keio
University as professor, Yomiuri learned yesterday. Takenaka has
been unemployed since he quit his House of Councillors seat in late
September, saying, "My job in the political world was over." All
eyes were therefore forced on what he would do next.

Takenaka entered the Development Bank of Japan in 1973. After
working as associate professor at Osaka University and professor at
Keio University, he assumed the post of state minister in charge of
economic and fiscal policy in April 2001 in the Koizumi cabinet. He
provided theoretical support for then Prime Minister Koizumi
structural reform drive, which included financial revitalization and
postal privatization.

18) Basic Education Law revision bill likely to clear the Diet as
ruling and opposition camp agree on holding public hearings

TOKYO SHIMBUN (Page 1) (Full)
November 2, 2006

The likelihood is that a bill revising the Basic Education Law, now
in the Diet spotlight, will be passed during the ongoing session.
Directors of the House of Representatives Special Committee on the
Basic Education Law agreed last evening to hold public hearings on
Nov. 8 in the cities of Nagoya, Tsu, Sendai and Utsunomiya. Given
that, the environment for taking a vote on the bill has now been
prepared.

The ruling parties initially called for holding those public
hearings on Nov. 6, but they gave a concession to the opposition
camp to hold them on Nov. 8, conducting deliberations on the bill on
the 6th.

Holding public hearings is stipulated in a Lower House rule.
Therefore, special committee members have to hear views from experts
in local cities. With the conclusion of the public hearings, the
Lower House will complete deliberations on the bill. It has been the
practice for the ruling camp to move into action to put a bill on a
vote.

The Lower House spent in the previous session 50 hours for
deliberations on the government-sponsored bill and a bill submitted
by the main opposition party Minshuto (Democratic Party of Japan).
The two bills have been carried over to the current session.

The opposition bloc has called for holding more public hearings in
local cities and Tokyo. So they intend not to respond to discussion
on setting the voting date. The dominant view in the ruling
coalition is that the deliberations on the bill were sufficient and
they are now ready to take a vote.

The ruling camp foresees that even if the bill fails to clear the
Lower House in early November as they expected, it is possible for
it to be passed in the current extra Diet session, which runs until
Dec. 15.

19) Prime Minister to pour effort in boosting production of biofuel
as new energy resource

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

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Prime Minister Shinzo Abe instructed Agriculture, Forestry and
Fisheries Minister (MAFF) Toshikatsu Matsuoka yesterday to make
arrangements to expand the production of bioethanol, a part of
biofuel derived from agricultural products, like corn. Abe sets
forth the goal of producing 600 million kiloliters of bioethanol, or
10% of annual domestic consumption of gasoline. The government
plans to boost production mainly in Hokkaido and Okinawa. Spreading
biofuel is part of efforts to contain global warming and to increase
energy resources, as well as to create new jobs by fostering a new
industry.

Biofuel is derived from living organisms, such as raw garbage, wood
shavings, and manure from livestock, and bioethanol is a part of it.
According to MAFF, Brazil produced 16.7 billion kiloliters of
biofuel in 2005 to use the product for autos.

In Japan, however, only 30 kiloliters of biofuel is produced
annually. Matsuoka said, "We are still in an experimental phase."
MAFF has requested in its FY2007 budget request 10.6 billion yen for
the biofuel project with the goal of producing more than 50,000
kiloliters of biofuel in FY2023. The prime minister also took up in
his policy speech the need to accelerate the use of bioethanol. The
year targeted by MAFF might be moved up.

20) Prime minister to call for government bond issues to be held to
27 trillion yen or less in FY2007 budget

MAINICHI (Page 1) (Excerpts)
November 2, 2006

The government decided yesterday to hold down the new government
bond issuance in the FY2007 budget to 27 trillion yen or less. Prime
Minister Abe will shortly notify the government and the ruling
parties of this policy decision. Abe has already instructed them to
set the amount for next fiscal year at lower than the amount in this
fiscal year (29.97 trillion yen). The prime minister is willing to
show his determination to continue fiscal reconstruction efforts by
reducing the nation's deficit more significantly than in the days of
the Koizumi administration through tax revenue increases and
spending cuts.

After the bursting of the bubble economy, government bond issuance
rapidly surged because of sharp decreases in public works projects
and tax revenues. Since FY1998, the amount of issuance remained at
the 30 trillion yen level for eight consecutive years. Former Prime
Minister Junichiro Koizumi pledged to hold down the government
issuance to below 30 trillion yen when his administration was
inaugurated.

Abe deemed it necessary to show his policy of "giving priority to
spending cuts over debate on the consumption tax" by further
promoting Koizumi's goal of capping the issuance at 30 trillion
yen.

SCHIEFFER