DAILY SUMMARY OF JAPANESE PRESS 02/07/06

UNCLAS SECTION 01 OF 10 TOKYO 000691

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SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 02/07/06


INDEX:

(1) Poll: 74% see income gap as widening

(2) Interview with constitutional research commission chairmen
from LDP, New Komeito, Minshuto; LDP to formulate second draft
constitution in latter half of the year, New Komeito to come up
with proposals to add to the Constitution, Minshuto to sort out
amendment proposals for the public

(3) Japanese, US governments drawing fire over discontinued US
beef imports

(4) Americans less interested in anti-BSE measures; USG still
enjoying consumer confidence

(5) US security unit chief Maher, US Embassy official responsible
for USFJ realignment states that without relocation of Futenma,
reduction of Marines not possible

(6) Editorial: Gov't must explore strategy for Iraq-based GSDF
troops to exit with applause

(7) Shaky Japan-US-China relations - the light and shadow of
Koizumi diplomacy (Part 5): Foreign Ministry cringes, unable to
determine attitude toward China

(8) Entire picture of reorganization of government-affiliated
financial institutions: Yen loans to be integrated into JICA in
reforming ODA system; JBIC to be dismantled

ARTICLES:

(1) Poll: 74% see income gap as widening

ASAHI (Page 1) (Full)
February 4, 2006

A total of 74% of the public think the income gap in Japan is
expanding. Among them, 70% see problems about such a trend. A
total of 81% feel uneasy about being pinched for money. In the
meantime, a total of 58% have a sense of resistance to the trend
that is dividing society into winners and losers. Such public
awareness of disparities and money stood out in a mail-based
nationwide public opinion survey conducted by the Asahi Shimbun
from December last year through January this year. In the survey,
respondents were also asked if they thought competition would
heighten vitality. In response to this question, "yes" accounted
for 60%. In addition, respondents were further asked if they
thought Japan was a society where it is impossible to recover,
and "no" accounted for 60%. As seen from these figures, the
general public is taking a positive view of competitive society
in itself.

The Diet is also debating economic disparities in society in
connection with Prime Minister Koizumi's structural reform
initiatives. In the survey, respondents were asked if they
thought the income gap was widening. In response to this
question, 74% answered "yes," with 18% saying "no." Among those
who answered "yes," 69% regarded the widening of the income gap
as a problem. Similarly, 51% of all respondents saw the widening
of the income gap as problematical.


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In the breakdown of those thinking the income gap was widening,
males accounted for 77%, and females 71%. Males in their 40s and
males in their 50s accounted evenly for 83%, topping all other
age brackets. Those not satisfied with their household income
have strong feelings about it.

In the case of those thinking the widening of the income gap was
a problem, 54% of them ascribed the gap to factors other than
individual capability and diligence. Among those seeing no
problem about the widening of the income gap, 72% attributed it
to individual capability and diligence.

As far as money is concerned, 3% thought of themselves as
winners, while 21% categorized themselves as losers. A total of
72% answered that they did not belong to either group.
Respondents were also asked if they had a sense of resistance to
such dichotomy. In response, "yes" accounted for 58%, with "no"
at 35%.

In the survey, respondents were also asked about competition. "Do
you think if competition will heighten social vitality?" This
question drew "yes" from 59%. They were further asked if they
thought Japan was a society where they could not recover once
they fell behind. In response to this question, 60% answered
"no."

(2) Interview with constitutional research commission chairmen
from LDP, New Komeito, Minshuto; LDP to formulate second draft
constitution in latter half of the year, New Komeito to come up
with proposals to add to the Constitution, Minshuto to sort out
amendment proposals for the public

YOMIURI (Page 4) (Full)
February 7, 2006

The ruling Liberal Democratic Party (LDP),its coalition partner
New Komeito, and the main opposition party Minshuto (Democratic
Party of Japan) will continue internal debate on a revision of
the Constitution this year, as well. How far have their
constitutional debates been boiled down?

LDP Constitutional Research Commission Chairman Hajime Funada:

The LDP released its draft constitution last November. Some
assume, however, that the pace of speed to expedite
constitutional debate might slow down because of the formulation
of the draft constitution. Our task for this year is to maintain
enthusiasm among party members on the draft constitution. We want
to hold symposiums in 11 regional blocs across the countries.

In an attempt to maintain a mood of expectation about
constitutional reform, we would like presidential candidates to
talk about their views on Article 9 of the Constitution, as well
as on the rights and obligation of the people during their
campaigns for the September presidential race. The new
president's opinion will affect constitutional debate in the LDP.

We expect to hear views not only from Diet members but also from
rank-and-file LDP members. We want to redefine the rights and
obligations of the people in the draft constitution so that
public cooperation with the government will be highlighted. This
means to formulate a second draft constitution. We want to hammer
out the definition of the right to collective self-defense in the

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process of discussing a fundamental law on national security.

New Komeito Constitutional Research Commission Chairman Akihiro
Ota:

With an eye on the fall this year, the New Komeito will work out
a set of proposals for the Constitution in some form. We would
like to come up with our draft constitution before constitutional
debate begins after a bill to hold a referendum on a revision of
the Constitution clears the Diet. The commission will hold as
many meetings as possible so that it will boil down views in the
party.

The common perception among the people is that the present
Constitution is excellent. The continuity of the principles of a
constitution is important. Since the people decide on a
constitution through voting, the process for creating a
constitution should be careful. Our party's position is as
follows: the three basic principles of the Constitution --
popular sovereignty, respect for fundamental human rights, and
pacifism -- should be firmly upheld; and the first paragraph (war
renunciation) and second paragraph (not possessing military
power) of Article 9 should be also kept intact. Our party then
calls for adding such new rights as an environment right and
privacy right to the existing rights. If possible, we would like
to stipulate them in an article. Regarding Article 9, we are now
discussing as to whether the existence of the Self-Defense Forces
(SDF) and ways of international contribution should be added to
the present Constitution. Many people see our party as "peace
party" that thinks a great deal of Article 9. We take that image
seriously.

Minshuto (Democratic Party of Japan) Constitutional Research
Commission Chairman Yukio Edano

It is not necessary to discuss all subjects in constitutional
reform all at once. Subjects on which a national debate is over
and an agreement is reached at the Diet should be first
discussed.

We have finished discussions on a review of the security,
decentralization, and the cabinet system. The set of proposals
our party presented last October was too long in terms of
quantity. Therefore, we want to sort out them so that the public
will find it easy to judge or discuss them.

Setting aside the question of whether it is right to call it
"itemization," which (President Seiji Maehara took a position of
looking into),it is irresponsible to call on the public to read
it all.

I want party headquarters to host symposiums in 11 regional blocs
nationwide.

(3) Japanese, US governments drawing fire over discontinued US
beef imports

ASAHI (Page 4) (Full)
February 7, 2006

The public is growing increasingly distrustful of the
government's steps to deal with US beef imports. The cabinet
released a statement last November saying that the government

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would inspect US meatpackers before resuming beef imports, but
the government failed to do so.

Japanese Communist Party Executive Committee Chairman Kazuo Shii
pointed out the irresponsibility of the Japanese and US
governments, saying:

"In resuming exports to Japan, the US neither had an intention to
abide by a set of requirements, such as removing specified risk
materials, or rules. In addition, Japan had no serious intention
to conduct inspections."

Minshuto (Democratic Party of Japan) Secretary General Yukio
Hatoyama also criticized the government, noting:

"The US was sloppy, but the Japanese government, which failed to
detect its sloppiness, was sloppier than the US. The government's
premature decision to resume imports was clearly wrong."

Hatoyama also revealed his party's plan to continue pursuing the
government's accountability as one of the most serious issues in
Diet question-and-answer sessions on the fiscal 2006 budget that
stared yesterday.

Meanwhile, Liberal Democratic Party Upper House Secretary General
Toranosuke Katayama shrugged off the opposition bloc's call for
the resignation of Agriculture, Forestry and Fisheries Minister
Shoichi Nakagawa. But Katayama also commented, "Japan has to
check the procedures thoroughly before resuming imports."

(4) Americans less interested in anti-BSE measures; USG still
enjoying consumer confidence

NIHON KEIZAI (Page 7) (Full)
February 6, 2006

Since the Japanese government imposed a second ban on US beef
imports, the sloppiness of the safety procedures being taken by
the US to prevent BSE has been in the spotlight. American
consumers, however, have shown little interest in the beef safety
issue. Speculation is that the difference in reactions of
Japanese and American consumers is attributable to differences
between the two countries in media coverage of the BSE problem
and in consumer confidence in government handling of food safety
issues.

Japan decided to re-impose a ban on US beef imports on Jan. 20 in
reaction to the discovery of backbones, designated as a specific
risk material (SRM),in a US beef shipment to Japan. At that
time, leading US newspapers and TV news took up Japan's decision,
but few have made follow-up reports. The US Department of
Agriculture (USDA) released on Feb. 2 an inspectors' report on
anti-BSE measures pointing out the sloppiness of management at
most of the 12 meat-processing facilities in the US inspected.
The report cited that nine facilities, three-fourths of them, did
not properly keep records on SRM removal. All Japanese newspapers
covered the USDA report in evening editions on Feb. 3.

In contrast, leading American newspapers did not give prominently
coverage to the story. The Washington Post and the Wall Street
Journal on Feb. 3 gave inside-page play to the report, but the
New York Times and USA Today ignored the story. A major trading
house spokesman said: "There has been no major change" in demand

TOKYO 00000691 005 OF 010


for US beef, "even after Japan's re-imposition of a ban." Michael
Hansen, a member of the Consumers Union, a major American
consumer group critical of Washington's anti-BSE measures,
commented: "Many consumers in the US have little interest in anti-
BSE measures, so the US media have not prominently covered the
issue. ... Even so, it is not true to say that the American
people's interest in food safety is low." For instance, in the
US, given that the volume of tuna consumed has skyrocketed due to
the recent sushi boom, more attention has been paid to the issue
of mercury-tainted large-size fishes and shellfishes than in
Japan.

The Food and Drug Administration of the US issued notice earlier
than Japan warning that pregnant women should limit the intake of
large fishes and shellfishes. The Chicago Tribune carried an
article concerning an investigation report on mercury-
contaminated tuna late last year. An executive of a leading US
meatpacker grumbled: "I wonder why only beef has become the focus
of attention in Japan."

David Roppek (TN: phonetic),a lecturer of the Community Hygiene
Faculty at Harvard University who is an expert on the BSE issue,
gave this analysis: "The difference in Japanese and American
consumer confidence in government handling of food safety has
been reflected in their different reactions to the BSE issue."

The first case of BSE in Japan in the fall 2001 completely
deprived consumers of confidence in the Japanese government,
because the government had always said, "Japanese beef is safe."
The government's continued authorization of the use of meat-and-
bone meal also undermined consumer confidence in the government
further.

Meanwhile, the US government has prohibited farmers from using
meat-and-bone meal four year earlier than Japan. Regarding the
potential risk of BSE infection in the US, as well, Washington
has said: "The possibility is low, but it is not zero." According
to Roppek, when the first case of BSE was reported in the US late
in 2003, "the US government did not lose consumer confidence and
prevented a panic because it had taken safety measures several
years earlier than Japan and also continued to offer necessary
information."

Americans still place high confidence in USDA-quality-guaranteed
US beef. Unless a sensational incident, like a discovery of a
number of BSE-infected cows, takes place, it is likely that
American consumers will continue to remain calm about the BSE
issue.

(5) US security unit chief Maher, US Embassy official responsible
for USFJ realignment states that without relocation of Futenma,
reduction of Marines not possible

OKINAWA TIMES (Page 2) (Full)
February 7, 2006

Kevin Maher, the US Embassy in Japan's chief of the security
unit, who is responsible for US force realignment, briefed
reporters in Fukuoka City yesterday on the realignment report. He
said: "The relocation of Futenma Air Station and realignment as a
whole are a package. If the relocation is not carried out, it
would not be possible to lessen the security burden, including
reducing 7,000 Marines stationed in Okinawa."

TOKYO 00000691 006 OF 010



Maher stressed, "Just reducing will lead to weakening the US-
Japan alliance." "I would like to ask the residents of Okinawa
Prefecture for their calm consideration and understanding," he
added.

However, Maher also referred to the opposition of Governor
Keiichi Inamine and Nago City to the plan to relocate Futenma to
the coastal portion of Camp Schwab, as agreed by the Japanese and
US governments: "There will likely be some technical changes by
the time the final report comes out in late March." He indicated
a flexible stance toward such revisions as the specific site for
the relocation and the direction of the runway.

Turning to the US Marine Corps' Iwakuni base (Yamaguchi
Prefecture),which is to be the site for the relocation of
carrier-borne jets no at Atsugi Air Station (Kanagawa Pref.),he
explained: "Iwakuni, being close to North Korea, is a strategic
point for military units rapidly responding to a contingency in
the Far East. The decision to transfer carrier jets there will
make response more effective by integrating the operations of the
US Marines and Navy."

(6) Editorial: Gov't must explore strategy for Iraq-based GSDF
troops to exit with applause

SANKEI (Page 2) (Full)
February 4, 2006

The government is now reportedly preparing to complete the
withdrawal in May of Japan's Ground Self-Defense Force troops
currently deployed in the southern Iraqi city of Samawah.

British and Australian forces, tasked with Samawah's public
security, are planning to pull their troops out of Iraq this
spring. In that case, the government is worried about how to
ensure the safety of the Samawah-based GSDF personnel. This seems
why the government is preparing to recall the unit.

If that is the case, however, we cannot but wonder if the GSDF
troops will be applauded by the Iraqi people and the
international community as they leave.

The GSDF's program of Iraq reconstruction assistance is now in
its third year. In Samawah, the GSDF has been hiring up to 1,100
locals a day, offering jobs like repairing public facilities. The
GSDF wrapped up its water supply as water purifiers went into
operation. However, the GSDF remains on its missions, such as
repairing schools and roads. In mid-January, findings from a poll
of local residents in the province of Muthanna, where Samawah is
situated, were released. According to the poll, 66% do not want
the GSDF to pull out this year. As seen from this figure, a
majority of local communities there want the GSDF to continue its
reconstruction aid.

If the GSDF unilaterally discontinues these job offerings and
assistance projects, its withdrawal might be fraught with risk.

The government has already pledged a total of 5 billion dollars
in aid for Iraq reconstruction. Japan has already distributed or
decided on grant aid amounting to 1.5 billion dollars. Japan also
aims to provide yen loans equivalent to 3.5 billion dollars. Iraq
probably wants Japan to continue its assistance with such loan

TOKYO 00000691 007 OF 010


aid. The government should explore an exit strategy in order to
facilitate such local coordination. In the beginning there was
nothing. The government said, "Let there be a withdrawal
schedule, and there was a withdrawal schedule." That is probably
not the case.

The problem is that Self-Defense Forces personnel on overseas
missions may use weapons to protect themselves but are not
allowed to engage in public security. This is because the
government interprets the act of fighting back when involved in a
battle as falling under the use of force, prohibited by the
Constitution of Japan's Article 9. However, the constitutionally
prohibited use of force as a means of settling international
disputes is for aggressive wars. Article 9 is also interpreted as
not prohibiting Japan from participating in the United Nations'
policing.

The government, however, does not recognize this interpretation.
Japan does not accept even the United Nations' global standard
rules of engagement that allow using armed force to repel armed
attacks disturbing the execution of duties. As it stands, Japan
is a far cry from being a country acting in concert with the
international community and fighting against terrorism.

In his recent policy speech before the Diet, Prime Minister
Junichiro Koizumi said, "Japan will assist Iraq with its nation-
rebuilding efforts as a responsible member of the international
community." Japan should be able to ensure such resolve. That is
the job
of the premier, isn't it?

(7) Shaky Japan-US-China relations - the light and shadow of
Koizumi diplomacy (Part 5): Foreign Ministry cringes, unable to
determine attitude toward China

MAINICHI (Page 2) (Almost full)
February 3, 2006

"Even if you tell me not to visit, I will do so." So Prime
Minister Junichiro Koizumi revealed his intention to continue
visiting Yasukuni Shrine during a meeting with President Bush on
Nov. 16 at the Kyoto State Guesthouse.

This conversation was excluded from a press release, thereby
leaving Ministry of Foreign Affairs (MOFA) officials feeling
impotent. "Such a statement from the prime minister," a senior
MOFA official lamented, "made us feel that there is no role for
us to play."

Three weeks later, an essay written by former Ambassador to the
United States Takakazu Kuriyama, 74, appeared in the New Year's
issue of the MOFA-affiliated journal Gaiko Forum. The essay
created a stir among foreign policy watchers at home and abroad,
because Kuriyama, who also served as vice minister, defined his
position as "not supporting the prime minister's visits to
Yasukuni Shrine," albeit with conditions attached.

Beginning with this line, "My assertions do not stem from a
masochistic view of history," and based on the conviction that
acknowledging the mistakes of the past would help strengthen the
moral standpoint of the nation, the long essay urges the
necessity of rapprochement with neighboring countries. The
journal carried the essay in two installments - one in its New

TOKYO 00000691 008 OF 010


Year's issue and one in its February issue. When asked what
compelled him to write it, Kuriyama said:

"Japan's nationalism appears to be getting out of control. I'd
like those who are in responsible positions in the political
world to be aware of this point."

Many in the Foreign Ministry, though, are furious with Kuriyama's
essay or perplexed by it. One official said, "I feel like we've
been stabbed in the back." Another official noted, "It'd be
troublesome if the public regarded it as the ministry's
position." Prime Minister Koizumi, who has seen his clout grow
since winning a landslide victory in last fall's Lower House
election, has authority over every government office in
Kasumigaseki, to say nothing of his Liberal Democratic Party
(LDP). MOFA has become notably nervous about the Yasukuni issue.
The general consensus right now among MOFA officials is that the
less is said, the better.

"Wasn't it the liberals and the pro-China officials like Kuriyama
who created the causes of the criticism heaped on the Foreign
Ministry today?" So asked a ministry official who has lost hope
due to a string of unfavorable incidents involving the ministry,
including the misappropriation of secret diplomatic funds, the
ministry's inappropriate links to House of Representatives member
Muneo Suzuki, and public criticism of the inefficient and opaque
official development assistance (ODA) policy.

The so-called China school (the diplomats who received Chinese
language training in MOFA) have been criticized for bringing
about the diplomatic stalemate with China. Until recently the
position of director of MOFA's China and Mongolia Division had
essentially been reserved for members of the China school. But
MOFA is likely to appoint someone outside of the group to the
post for the first time in 32 years this spring.

This appointment is said to reflect the strong desire of
Administrative Vice Foreign Minister Shotaro Yachi, who aims to
shape a resolute foreign policy full of great aspirations. Some
in the China school welcome this appointment as a good
opportunity to break the impasse, but some are objecting to it,
suggesting that Yachi may be trying to blame the group and should
be aware of the harsh views on the matter heard even in the
United States.

There is also a story behind the selection of an ambassador to
China. Back on October 11, 2005, late in the day, former LDP
Secretary General Hiromu Nonaka, who has enjoyed the strong

SIPDIS
confidence of the Chinese government, and Ambassador to China
Koreshige Anami were both invited to the Diaoyutai Guest House in
Beijing and dined with Vice President Zeng Qinghong, Chinese
Communist Party Central Committee member Zhao Qizheng, and other
Chinese officials at a special room for state guests.

At the time, back in Japan, a plan to choose Ambassador to
Indonesia Yutaka Iimura, who studied French, to replace China
school alumnus Anami was being discussed. In the dinner party,
however, Zhao made this comment: "It's not a good idea to select
a person who isn't good at Chinese at a time when relations are
so chilly." Set off by this remark, Japan gave up on the idea and
instead of Iimura, chose Ambassador to Okinawa Yuji Miyamoto, who
comes from the China school. Iimura has been informally
designated as ambassador to France.

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This choice of ambassador to China may be seen as a well-balanced
selection in that it reinforces a firm stance toward China while
keeping open a channel for dialogue. But some have criticized it
as a manifestation of MOFA's drift between foreign policy and
domestic politics due to its inability to chart a roadmap for
diplomacy toward China.

(8) Entire picture of reorganization of government-affiliated
financial institutions: Yen loans to be integrated into JICA in
reforming ODA system; JBIC to be dismantled

NIHON KEIZAI (Top Play) (Slightly abridged)
February 4,2006

The overall picture of privatization and integration of
government-affiliated financial institutions was firmed up
yesterday. The government's expert council, which has looked into
ways to reform the official development assistance (ODA) system,
will issue a recommendation report late this month. The report is
expected to include a policy of separating the yen loans section
and the international financing section from the Japan Bank for
International Cooperation (JBIC) and integrating the yen loan
function into the Japan International Cooperation Agency (JICA),
which is in charge of technical cooperation under the ODA system.
The international financing section will be integrated into a new
entity into which four public financial corporations will be
unified. The JBIC will be specialized in corporation
revitalization and investment activities. For the time being, it
will not engage in the banking business.

The government's study group on external economic cooperation
(chaired by Akio Harada, former attorney general) has proposed
the breakup of the JBIC. There has been a call to maintain the
independence of the JBIC, but the proposed plan is aimed to
establish an efficient ODA implementing system, by integrating
reimbursable financial cooperation (yen loans) and technical
cooperation. The Foreign Ministry will continue to be responsible
for grant aid.

A huge financial institution in charge of broad-based business
operations will come into existence, if the international
financing section of the JBIC is integrated into an entity to be
newly created, combining four existing government-affiliated
financial institutions.

The government plans to introduce to the current Diet session an
administrative reform promotion bill, which sets basic guidelines
for the privatization and integration of public financial
institutions. It will aim to get through an extraordinary Diet
session likely to be convened this fall a set of policy financing
reform bills that set concrete proposals for the management form
of the new organization.

As a vehicle to be in charge of the planning and formulation
function of the ODA system, a cabinet council responsible for
compiling comprehensive aid strategy at the initiative of
politicians will be newly established under the Cabinet. The
prime minister will chair the panel, and its member will consist
of the chief cabinet secretary, the foreign minister, the finance
minister and the minister of economy, trade and industry. The
Foreign Ministry will continue to play a leading role in the
selection of specific project items.

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JBIC will not engage in banking business after privatization: It
will instead be specialized in investment and loan business

The JBIC has started considering business activities after
privatization in fiscal 2008 with a view to being specialized in
the investment and loan business and not pursuing the banking
business for the time being. With a view to getting listed on the
Tokyo Stock Exchange, the bank will boost earning power, by
concentrating its resources on business areas in which it has
experience, including extending loans for corporate
revitalization and the consolidation of social infrastructure. It
intends to appoint management personnel from the private sector
in preparation for competition with private companies.

The JBIC's outstanding investment and loan balance as of the end
of Mar. 2005 stood at approximately 14 trillion yen. The number
on the payroll is 1,300, which is smaller than leading regional
banks, which employ around 3,000. Its view is that it would be
difficult to do business with petty enterprises and individual
customers as regional banks do. Since it is absolutely necessary
to invest an enormous amount of money into the building of a
computer system in order to take part in banking operations, it
will not go into this business for the time being. Chances are
that since it will not deal with banking and trade account
settlement operations, it may not obtain a bank license.

The JBIC will focus its business operations on highly profitable
areas, targeting existing customers, such as leading companies,
mid-tier companies and local governments even after privatization
so as to constrain business cost. In specific terms, the bank
will focus its business operations on assistance for corporate
revitalization, in which it will invest in seriously troubled
companies so as to gain on sale of their shares once they are
regenerated, and assistance for privatization of public sectors,
including water-supply services.

It will procure resources for investment and loans from private
banks or through the issuance of corporate bonds. It could face
an increased procurement cost, as it will lose state guarantee
after privatization. At present, it only issues ten-year bonds
with state guarantees, but it intends to issue 15-year bonds
before the end of fiscal 2006. It thus plans to secure long-term
funds in view of fund management shortly after privatization.

The JBIC will work out a basic privatization plan and explain
details to investors possibly in late February.

SCHIEFFER