DAILY SUMMARY OF JAPANESE PRESS 11/22/06

UNCLAS SECTION 01 OF 08 TOKYO 006690

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SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 11/22/06


INDEX:

(1) Editorial: Minshuto's (Democratic Party of Japan) unreasonable
"confrontation" unacceptable

(2) Serious allegations arising against MAFF Minister Matsuoka

(3) Reading overseas media -- APEC: "Big talk" summit diplomacy
unfolded, but Iraq War cast shadow over Hanoi

(4) Exploration of new order for Asia (Part 2): Market integration
urging for reform

(5) Domestic-produced jet; Mitsubishi Heavy Industries offering
favorable conditions to JAL, ANA, including shouldering cost of
payments for stopgap aircraft to make up for delayed deliveries

ARTICLES:

(1) Editorial: Minshuto's (Democratic Party of Japan) unreasonable
"confrontation" unacceptable

MAINICHI (Page 5) (Full)
November 22, 2006

Opposition parties have been boycotting deliberations in both Diet
chambers since Nov. 15, when the ruling coalition adopted a bill
amending the Basic Education Law at a Lower House special committee
session in the absence of opposition lawmakers. The parties have now
decided to rejoin deliberations on Nov. 22. Minshuto (Democratic
Party of Japan) and other opposition parties fielded a single
candidate for the Nov. 19 Okinawa gubernatorial election, but their
candidate was defeated by the ruling coalition backed candidate. The
opposition's loss in the Okinawa race means that their strategy of
boycotting Diet deliberations did not work. Therefore it is natural
that the opposition has made a change in their Diet strategy.

It is regrettable that Minshuto seems to have not analyzed the
causes of the defeat in the Okinawa race. Party head Ichiro Ozawa
said, " Minshuto lacks solid power in Okinawa." But is that the only
reason for its loss? In order to rebuild its election campaign
strategy with an on next summer's Upper House election, it is
necessary for the main opposition party to seriously summarize the
outcome of the election.

Minshuto should first admit that the united front by opposition
parties this time around was a failure. The reason for Minshuto and
other opposition parties having backed Keiko Itokazu in the Okinawa
gubernatorial race was probably that Itokazu backed by Minshuto, the
Japanese Communist Party (JCP) and the Social Democratic Party (SDP)
defeated the LDP-backed candidate in the 2004 Upper House election.
The votes obtained by Itokazu was less than the number he won in the
Upper House election even though the number of parties backed her
increased and the voter turnout of the gubernatorial election was
higher than that of the Upper House election.

In an attempt to uphold its joint efforts with the JCP and SDP,
Minshuto took a strategy of boycotting committee sessions and put
off deliberations on a bill upgrading the Defense Agency to the
status of a ministry, which many party members favor. Since there
are many proponents of the realignment of US forces in Japan, some
members openly expressed their discontent with Itokazu, who opposes
the relocation of the US Marine Corps Air Station Futenma to the

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coastline of Camp Schwab.

Many voters might have thought that the joint struggle of opposition
parties was unreasonable from a policy point of view. Looking at the
result of exit polls, it is evident that Okinawan voters are
interested in and pin their hopes on both resolving the US base
issue and receiving a package of economic measures to promote the
prefecture's development. Although it was fine for Minshuto to
oppose the present situation by rallying together with other
opposition parties, it is obvious from the result of the election
that voters had doubts about whether it, as the main opposition
party, would be able to come up with policy measures for the island
prefecture.

It is understandable that Minshuto must lock horns with the ruling
camp because it believes that the Basic Education Law does not need
amending. The party, however, submitted its own bill with amendments
since it, too, was determined that the law should be revised.
Moreover, the bills of the government-ruling coalition and Minshuto
had a number of common features. Like the government-ruling camp
bill, Minshuto's bill will not do anything to resolve such new
issues of children committing suicide due to school bullying and the
failure of many schools to teach compulsory subjects.

Voters have seen through Minshuto's senseless "confrontation" with
the ruling coalition. It is time for Minshuto to make its vision
clearer. The party should clarify how the government would differ
from the government-led by the Liberal Democratic Party and New
Komeito if it assumes power.

A debate on whether the party should take a stance of simply
opposing the ruling camp on everything or a stance like before of
presenting counterproposals will likely flare up again in Minshuto.
Both stances may be necessary, however. Minshuto lawmakers should
thoroughly vet the election comprehensively in an open forum.

(2) Serious allegations arising against MAFF Minister Matsuoka

AERA (Page 25-27)
Nov. 27, 2006

Prime Minister Shinzo Abe appointed House of Representatives member
Toshikatsu Matsuoka to head the Ministry of Agriculture, Forestry
and Fisheries (MAFF). But Matsuoka has a spotty reputation for the
mass media in the past have reported various scandals involving him,
including cases of alleged kickbacks in return for
influence-peddling and blackmail.

Serious evidence of new scandals involving Matsuoka came out from
Shinichiro Yamamoto, 63, a stone-quarrying owner in Kumamoto
Prefecture and a former senior member of a now-disbanded gangster
association. We made inquiries to Matsuoka on these allegations, but
he has made no response.

According to Yamamoto, his childhood friend Hideki Asada made a
phone call to him in the first half of 2000, asking him to try to
resolve Matsuoka's scandalous involvement with a woman. Hideki Asada
is a younger brother of Mitsuru Asada, former chairman of the Hannan
Group (based in Osaka),the nation's largest meatpacker that was
charged with having defrauded MAFF in connection with BSE.

Following the ministry's announcement on Sept. 10 in 2001 of the
first case of BSE in Japan, the government decided to require all

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cows to be tested for human consumption starting Oct. 18. As
measures to dispel public concerns about the safety of Japanese
beef, MAFF decided to purchase meat proceeded before Oct. 17 through
industrial organizations. In this connection, former Hannan Group
Chairman Asada was arrested by Osaka Prefectural Police in April
2004 on suspicion of swindling a huge amount of subsidies from the
ministry by disguising products not eligible for the subsidy program
as eligible ones.

This magazine also reported about Mitsuru Asada's close ties with
Lower House member Muneo Suzuki, who got a prison sentence over
another incident, and Matsuoka, who is regarded as Suzuki's senior,
in connection with political donations.

Several months before Hannan committed the BSE subsidies-connected
crime, Hideo Asada had made a phone call to Yamamoto asking for his
help over Matsuoka's personal affairs, adding that his brother, the
Hannan chairman, told his younger brother to ask Yamamoto. In this
case, Matsuoka took a bar hostess in Kumamoto City to a Kaga hot
springs inn, and her common-law husband (Mr. A); a person linked to
a gangster organization, went to Matsuoka to make a violent protest.
At a loss, Matsuoka asked Hannan to settle the issue, according to
Yamamoto. A settlement was reached in this case with money through
the president of a construction firm in Kumamoto, who knew Mr. A.
This president disclosed the details in an interview with this
magazine.

Yamamoto received another phone call from Hideki Asada about one
year after the first call. Asada asked for his assistance again
under the instruction of the Hannan chairman in an alleged
corruption case involving Matsuoka over an official facility
constructed in Aso-cho. According to Yamamoto, some political groups
took up this scandal and were accusing the persons concerned; he met
with political group members in response to a request by Asada.
These members cited the name of Matsuoka as one of the persons
involved in the corruption case. A settlement was again reached with
the payment of money in the end. This time, lawmaker Matsuoka
himself called Yamamoto to appreciate his efforts, Yamamoto said.

Although the contents of these two scandals are certainly serious,
this magazine believes the following case is far more serious.

In the first trial, it remained unknown why the Hannan Group was
able to swindle the government of such a huge amount of BSE-linked
grant money under the prompt instruction of Chairman Asada. If the
chairman had not been informed of the government subsidy program, it
should have been impossible to take such a huge amount of state
subsidies.

According to Yamamoto's testimony, it was around the time of
Hannan's acquisition of the subsidies when the Asada brothers
responded to an emergency request from lawmaker Matsuoka twice,
helped by Yamamoto. This means that Matsuoka, who was exerting
influence over livestock policy as a lawmaker lobbying for the
interests of agriculture and forestry industries, was heavily
indebted to the Hannan Group around that time.

Yamamoto explained why he decided to offer testimony this time, "I
was used once but discarded by Matsuoka and the Hannan Asada
family." He explained the situation: "I was asked this spring to
meet the head of a gangster association in Kumamoto through a third
person and met him with two others; the gang boss told me, adding
that nobody had asked him to meet me: "If you remain silent about

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the (Matsuoka) cases, particularly about the Aso case, I will
introduce a job for you. But if you make a fuss over them, we might
kill you."

Yamamoto has continued to ignore this intimidation. The Kumamoto
Prefectural Police Headquarters seems to have also learned of this
case.

Yamamoto initially did not know much about lawmaker Matsuoka. But he
said, "As a result of giving a helping hand to my friend Hideki
based on loyalty, I learned what kind of person that lawmaker really
is and trembled with fear. If I am called to give Diet testimony as
witness, I am willing to do so."

(By Hiroshi Hasegawa, writer)

(3) Reading overseas media -- APEC: "Big talk" summit diplomacy
unfolded, but Iraq War cast shadow over Hanoi

ASAHI (Page 15) (Full)
November 22, 2006

Noboru Nagaoka

What came to my mind when covering summit diplomacy carried on the
edges of the Asia-Pacific Economic Cooperation (APEC) forum was this
Japanese idiom: "Ohburoshiki" (big talk).

China envisions creating a 13-nation free trade zone involving
Japan, South Korea, and the 10 member nations of the Association of
Southeast Asian Nations (ASEAN) to expand it into an East Asia
community later. The population of those 13 nations comes to 2
billion and their GDPs would account for 19% of the world's total.

In rivalry with China, Japan advocates an idea of creating a
16-nation community to be joined by India, Australia, and New
Zealand, besides the 13 nations. The population would total 3.1
billion, and their combined GDPs would occupy 22% of the world's
total.

Prior to the APEC forum, the US' Bush administration announced a
concept of establishing a new trade zone. The purpose is to conclude
a free trade agreement with 21 nations and regions participating in
APEC. Because this zone does not involve India, the population in
the zone would drop, but the zone's GDP would exceed 50% of the
world's total.

This idea, however, seems less likely to come true. It appeared that
leaders simply carried on "big talk" one after the other.

The UK's BBC reported on the Bush idea coolly on Nov. 18: "America's
proposal is taken as a kind of insurance in case of the failure of
an attempt to revive world trade talks (which collapsed this
July)."

America's proposal was described in the APEC Hanoi Declaration this
way: "While there are practical difficulties in negotiating ..., it
would nonetheless be timely for APEC to seriously consider more
effective avenues...." The US proposal was able to save the
president's face somehow.

On the other hand, China is increasingly boosting its international
presence. Building a harmonious society is at the center of the

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President Hu Jintao's policy. In this context, the APEC declaration
incorporated the phrase: "A Dynamic Community for Sustainable
Development and Prosperity."

The New China News Agency on its Nov. 20 electronic version gave
this comment: "The key phrase was included in APEC's document. It
will have a grave impact on the efforts to push economic cooperation
in this region."

Meanwhile, APEC in its Bogor Declaration in 1994 stated: "Trade and
investment liberalization will be achieved by the industrialized
economies by 2010 and by developing economies by 2020." Well then, I
wonder what will happen to this goal?

Reuters made this comment on Nov. 12, "There are at least 50 free
trade agreement (FTAs) concluded or under negotiations among APEC
members," and it reported that progress toward concluding a
bilateral FTA "has caused the concept of creating a broad free trade
zone in the Pacific rim to lose momentum."

Perhaps because the APEC leaders' meeting was the first big
international conference held after North Korea's nuclear test in
October, leaders who gathered there devoted much more time to
discussions on how to make the North abandon nuclear weapons than on
economic affairs.

On the North Korean nuclear issue, Japan and the United States,
which insisted on releasing a statement condemning North Korea,
played a close game with China, which disagreed with the two
countries. The game, however, ended with the chairing nation,
Vietnam, releasing an oral statement that went, "Nuclear testing is
a palpable threat." But the statement went no further than to
express strong concern. Japan and the US then became prudent as the
six-party talks are to be restarted shortly.

When it comes to the achievements made at APEC, one was that Japan,
the US, and South Korea held a summit meeting after a lapse of four
years. South Korea's Chosun llbo wrote in its editorial of Nov. 20:
"This tells how estranged the three countries have been so far." It
also gave this bitter advice to President Roh Moo Hyun: "The primary
reason why the relations had become that chilly lies in the
president's tilt toward diplomatic adventurism of simply destroying
the trilateral relationship over the history issue without any
pragmatic alternatives."

Here in APEC, too, American media's focus of attention was on Iraq
rather than North Korea. The Washington Post in its column of Nov.
21 analyzed President Bush's visit to Vietnam by identifying the
Iraq War with the Vietnam War this way: "The president tiptoed away
from Vietnam. He should have done so four decades ago"; and, "While
sending soldiers to the death land (in Iraq),politicians in
Washington are unable to account for the reasons why they are doing
so, as they did so in the Vietnam War."

(4) Exploration of new order for Asia (Part 2): Market integration
urging for reform

NIHON KEIZAI (Page 1) (Excerpts)
November 20, 2006

Under China's lead, negotiations on concluding free trade agreements
(FTA) are being carried out actively all over Asia. Japan's Ministry
of Economy, Trade and Industry (METI),viewing such developments with

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a sense of alarm, is promoting the concept of forming a 16-nation
economic zone that would also include India and Australia. According
to a diplomatic source, the Bush administration, upset by the Abe
administration's attempt to forge ahead with a concept that excludes
the US, came up with the notion of an APEC-wide FTA just before the
Asia-Pacific Economic Cooperation (APEC) forum summit held until
Nov. 19 in Hanoi.

In the APEC summit, Prime Minister Shinzo Abe explained Japan's
position: "Washington's FTA concept is significant as one
multilateral approach to promote regional market liberalization."

China did not raise opposition to the US concept at the APEC summit,
but during the ministerial held prior to the summit, it had tried to
constrain the US from pursuing the idea.

In the US, calls will inevitably grow for more efforts to rectify
the current bilateral trade deficit with China, now that the
Democratic Party has taken control of both the House and the Senate
away from the Republican Party. Should a struggle between the US and
China for hegemony over the vast Asia market intensify, and if trade
friction between the two countries ignites, Japan will inevitably be
affected because of its expanding exports to the US through plants
in China owned by Japanese companies.

The fate of the Japanese economy hinges on "an open Asia." According
to METI, sales of Japanese manufacturers' subsidiaries in Asian
countries totaled slightly more than 220 billion dollars in FY2005.
This figure is twice that recorded three years ago and accounts for
nearly 5% of the nation's gross domestic product (GDP). As it
stands, Japanese manufacturers have increasingly depended on Asia in
earning profits. The number of local hires by Japanese subsidies
also exceeded 2 million.

In the nation, however, the labor force has shrunk to 1.4 million
after marking its highest record of 67.95 million in FY1997 because
of the falling birth rate and the aging population. Japanese
companies have made up for this decreased portion with Asian work
forces. According to an estimate, the workforce in Japan would
reduce by 10 million more in 2030. If Japanese companies are unable
to utilize Asian vitality, the Japanese economy will unavoidably be
on the wane.

In the US-led war on terror, the Koizumi administration played up
cooperative relations between Japan and the US. With China and South
Korea, however, Tokyo under the Koizumi government remained unable
to hold negotiations, suspending bilateral efforts on the economic
front. In the latest APEC summit, Prime Minister Abe held his second
bilateral summits with the Chinese and South Korean leaders. In the
Japan-China summit, the two leaders agreed to study creating a
bilateral economic ministerial meeting. Although Abe has launched a
new effort in economic diplomacy, the road ahead is likely to be
bumpy. The question is to what extent Japan will be able to open its
market to Asia.

Abe met with the Vietnamese leader on Nov. 19, together with more
than 130 business leaders from Nippon Keidanren (Japan Business
Federation),after the end of the APEC summit. Prime Minister Abe
expressed his eagerness to strike a deal in negotiations on an
economic partnership agreement (EPA) with Vietnam at an early date.
The two countries have decided to start negotiations next January.

But one Vietnamese economic minister grumbled, "The wish list

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presented by Japan of items to be excluded from the negotiations
cites so many items in a variety of areas, including agriculture,
forestry and fisheries products."

The agricultural sector has stood in the way of progress in all
trade negotiations, but there is the serious problem of shortage of
heirs, reflecting the falling birthrate and the aging population. In
order to make Japanese agriculture more competitive, there is an
option of domestic farmers engaged in creating only products with
high added value while allowing imports of certain products. Whether
to accept caregivers as proposed by the Philippines is also an
unavoidable question for Japan.

How will Japan be able to successfully deal with domestic objections
and reflect economic ties with Asia in its future vision? Prime
Minister will be tested on his capability to promote reform. Such
efforts will contribute to establishing the stability and prosperity
of the Pacific Rim Economic Region, which includes Asia and the US.

(5) Domestic-produced jet; Mitsubishi Heavy Industries offering
favorable conditions to JAL, ANA, including shouldering cost of
payments for stopgap aircraft to make up for delayed deliveries

YOMIURI (Page 1) (Full)
Evening, November 21, 2006

The government and the private sector are jointly developing the
nation's first domestically produced jet passenger plane. In this
connection, it was learned on Nov. 21 that Mitsubishi Industries has
offered unusually favorable contract conditions to Japan Airlines
(JAL) and All Nippon Airways (ANA) in promoting the sales of the MJ
(Mitsubishi Jet). The conditions include that if they purchase MJs,
Mitsubishi Heavy Industries will shoulder part of the cost of their
aircraft leasing for a period up to 2012, a time when the ordered
aircraft are scheduled for delivery. Since there is concern that the
MJ project itself, Mitsubishi Heavy Industries' long-cherished
desire, might suffer a setback if it fails to receive orders from
JAL and ANA, the company is desperately trying to bring about a
rollback in its market battle with foreign manufacturers by offering
a big treat to the two domestic airliners.

The MJ would be a domestic-produced 70-90-seater jet passenger
plane. If the company succeeds in commercializing the product, it
will be the first domestic-produced airplane put on the market in
about 40 years, since the development of the YS-11 propeller-plane.
Mitsubishi Heavy Industries, which is playing a lead role in the
project, and the Ministry of Economy, Trade and Industry, which is
supporting the project, hope JAL and ANA will buy their aircraft on
a large scale, with a view to the fact that the expansion of Haneda
Airport in 2009 will bring about more demand for aircraft for
domestic flights by both carriers.

The delivery of MJs will not take place until 2012 due to changes to
the specification and other reasons. Overseas aircraft
manufacturers, such as Brazil's Embrael and Canada's Bombardier,
which can deliver products in 2009, are ahead of sales negotiations
with JAL and ANA.

In order to make up for the late start, Mitsubishi Heavy Industries
has offered a contract condition that it is willing to shoulder part
of the cost of their leasing aircraft. According to the proposal, if
they reserve purchases of MJs, the company will pay part of the cost
of aircraft they lease from other manufacturers and cover part of

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the losses on the sale of stopgap aircraft they have purchased. The
amount of money Mitsubishi Heavy Industries would shoulder is
estimated to come to several billion yen.

The reason why Mitsubishi Heavy Industries has made this unusual
offer is that it needs to sell at least 350 MJs in order to make the
700-billion yen MJ project profitable. As such, it desperately wants
a large number of contracts with JAL and ANA. Mitsubishi Heavy
Industries plans to sell well over 100 planes in Japan alone. It
wants to give impetus to its sales promotion toward other carriers,
by winning big sales contracts on the domestic market.

SCHIEFFER