JAPANESE MORNING PRESS HIGHLIGHTS 02/17/06

UNCLAS SECTION 01 OF 13 TOKYO 000864

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SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 02/17/06


Index:

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

4) Prime Minister Koizumi positive about accepting President
Bush's invitation to visit US, relayed by Ambassador Schieffer

Diet uproar:
5) Furor in Diet over Minshuto allegation that LDP Secretary
General Takebe's son took 30 million yen last August from
Livedoor's Horie, now under arrest
6) Prime Minister calls the charges against Takebe's son a sham
7) Livedoor money poured into company at one time from Swiss
holdings
8) Opposition plans all out attack in Diet today on allegations
against Takebe's son of taking Horie money
9) Abe, Aso in yesterday's day are cautious in replying to
questions about war responsibility

China policy:
10) Foreign Ministry to establish in April a China strategy body
11) Minshuto (Democratic Party of Japan) struggling internally
to coordinate a unified China policy, given party head Maehara's
labeling China a threat

12) Government, ruling parties want tough line toward North
Korea but Koizumi would cut it some slack

Defense issues:
13) GSDF in final coordination of withdrawal from Iraq starting
next month
14) Japanese troops desire to withdraw from Iraq before new
administration there fully in place
15) Okinawa LDP lawmakers object to US-Japan agreement on Henoko
relocation plan

16) Plan to cut public works in terms of GDP to levels in US,
Europe

17) US removes approval to one beef export company that failed
to meet standard for shipping to Japan

Articles:

1) TOP HEADLINES

Asahi:
Employees of general contractors tell prosecutors Defense
Facilities Administration Agency official leaked project price
over runway construction at US Iwakuni base

Mainichi:
Former DFAA officials admit agency changed methods to facilitate
bid-rigging ahead of 2002 law

Yomiuri:
Shoddy construction of highway in Toyama Prefecture; smaller-than-
normal piles built to support two piers of the expressway bridge

Nihon Keizai:

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Finance Ministry mulling GDP-based target to slash public works
spending

Sankei:
Classified government document reveals government's informal
panel proposed two years ago that females and their descendants
be allowed to ascend to the Chrysanthemum Throne

Tokyo Shimbun:
Livedoor Co. sent 12 billion yen from account in another person's
name at bank in Switzerland to its affiliate's account at major
bank in Japan the day it was raided

2) EDITORIALS

Asahi:
(1) Government should provide peaceful life for Japanese women
left behind in China as children during the war
(2) Challenge of FRB Chairman Bernake

Mainichi:
(1) SDF mission in Samawah should be pulled out before summer
(2) Kobe Airport is not just a business model for airport
construction

Yomiuri:
(1) Government must come up with strategy for maritime policy
(2) Is latest export scandal tied to nuclear black market?

Nihon Keizai:
(1) New FRB chairman stresses "continuity" of monetary policy
(2) Internet providers should not forget free and open Internet
principle

Sankei:
(1) National debate should be begun with clean state on the
question of whether to revise the Imperial House Law
(2) China's Internet restrictions: We see information censorship

Tokyo Shimbun:
(1) Solicitation for unlisted shares: We should be careful about
such
(2) Revival of Nihonbashi: Let's have dream to build a new
Nihonbashi

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, February 16

NIHON KEIZAI (Page 2) (Full)
February 17, 2006

10:01
Arrived at the Prime Minister's Official Residence (Kantei).

14:05
Met with LDP Public Relations Headquarters Chairman Kimura and
Public Relations Division chief Ishizaki. Then met with American
Ambassador to Japan Schieffer.

15:15
Met with LDP Secretary General Takebe.

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16:04
Met with Deputy Chief Cabinet Secretary Futahashi.

17:26
Met with State Minister in charge of Economic, Fiscal, and
Financial Policy Yosano.

18:31
Met with five LDP senior officers, including Takebe, and members
of the Executive Council at Hotel Okura. Chief Cabinet Secretary
Abe was present.

19:57
Arrived at official residence.

4) Koizumi willing to visit US

TOKYO SHIMBUN (Page 2) (Full)
February 17, 2006

Prime Minister Koizumi met with US Ambassador to Japan Schieffer
at his office yesterday afternoon. In the meeting, Schieffer
invited Koizumi to visit the United States. "I'd like to, if
circumstances permit," Koizumi told reporters yesterday evening.
"I appreciate it," he added. With this, the premier was willing
to visit the United States before he steps down in September. He
avoided clarifying when to visit the United States because of
parliamentary schedules and other circumstances.

In the meeting, they did not talk about US military realignment
issues, such as the relocation of Futenma airfield, or the issue
of resuming US beef imports.

5) On alleged transfer of money by Horie to Takebe's son,
Minshuto member releases no copy of e-mail in question but
indicates confidence of authenticity

MAINICHI (Page 2) (Excerpts)
February 18, 2006

In a House of Representatives Budget Committee meeting on Feb.
16, Democratic Party of Japan (Minshuto) member Hisayasu Nagata
said: "Former Livedoor President Takafumi Horie, 33, instructed a
company employee last August to transfer 30 million yen to the
second son of Liberal Democratic Party Secretary General Tsutomu
Takebe." The instruction was given by e-mail, according to
Nagata. He claimed that he had a copy of the e-mail in question.
If the allegation is proved true, the issue will unavoidably have
a great effect on whether Takebe would have to resign. As of now,
Nagata has not released the copy of the e-mail itself, citing the
need to protect the identity of the information source. Over the
authenticity of the e-mail, heated debate is going on between the
ruling and opposition parties in the Diet.

In pursuing this issue, Minshuto has focused its attention on the
linkage of Takebe's support of independent candidate Horie, who
has been indicted for a violation of the Security and Exchange
Law, in the Lower House election last year to the alleged
transfer of 30 million yen to Takebe's second son. The e-mail,
according to Nagata, also said that the 30 million yen should be
listed in the company's account book as "consulting fee for

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election campaigning."

However, it has yet to be fully confirmed whether the e-mail
actually contained Horie's instruction. Although Nagata has not
released any material evidence, Nagata is confident about the
authenticity of the information.

Nagata released to reporters a reproduction of the e-mail's
contents that include neither the e-mail address nor the sender.
Nagata said that "the e-mail was sent out at 15:21,35 on Aug. 26
in 2005," adding that he has confirmed who had sent the e-mail
and who had received it.

Nagata read in the meeting on Feb. 16 the following contents of
the e-mail from Horie:

Make arrangements to transfer 30 million yen into a bank account
(the same account as in the previous case) for Mr. A (the name of
Takebe's second son) by Aug. 29, if possible, but by Aug. 31 at
the latest.

The money should be listed in the company's account book as
"consulting fee for campaigning."

Mr. B, ask for Mr. Miyauchi's instruction. I will convey this to
Mr. C.

Horie

Takebe's second son remains mum on alleged recipient of Horie
money

Although the Mainichi Shimbun has asked the second son of Liberal
Democratic Party Secretary General Tsutomu Takebe to respond to
its interview three times since Jan. 25, he remains unresponsive.
On Feb. 16, about 20 reporters swarmed in front of the
condominium that houses the company "Lifelong" operated by the
son of Takebe, located in Minami-Aoyama, Tokyo. A male staff
member told reporters: "He is now in Europe on business. He will
not be back until next week."

Takebe office: There is no transfer record in account

Members of Liberal Democratic Party (LDP) Secretary General
Tsutomu Takebe's office yesterday explained that although they

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checked the bank accounts related to Takebe's second son, they
found no record of transfer from former Livedoor President
Takafumi Horie. Takebe intends to present the LDP president of
the House of Representatives Budget Committee with the records of
the bank accounts and refute the Democratic Party of Japan's
allegation.

Tokyo prosecutors' office issues unprecedented comment: "We
haven't gotten facts"

On the allegation that the second son of Liberal Democratic Party
Secretary General Tsutomu Takebe would have received money from

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former Livedoor President Takafumi Horie, Tetsuo Ito, assistant
public prosecutor of the Tokyo District Public Prosecutors
Office, issued a written comment yesterday noting: "Regarding the
question of whether the e-mail in question actually exists and
what was pointed out is true, our office has not received any

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facts." It is unprecedented for prosecutors' office to issue this
kind of comment while an investigation still going on.

6) Prime Minister Koizumi: Allegation that LDP's Takebe's son
received 30 million yen from Livedoor "is false information"

TOKYO SHIMBUN (Page 1) (Full)
February 17, 2006

At a House of Representatives Budget Committee session yesterday,
a lawmaker from the main opposition party Minshuto (Democratic
Party of Japan) revealed that former Livedoor President Takafumi
Horie instructed his subordinate to transfer 30 million yen as a
consulting fee to the bank account of the second son of Liberal
Democratic Party (LDP) Secretary General Tsutomu Takebe. With
this regard, Prime Minister Junichiro Koizumi last night told
reporters at the Prime Minister's Official Residence, "I think
it's wrong to bring a groundless matter to a committee session."

Koizumi met yesterday afternoon with Takebe at his office. In the
meeting, Takebe told the prime minister:

"What a Minshuto member pointed out was totally groundless. I
cannot understand why the Minshuto lawmaker brought up a complete
fabrication. Time will tell that what he pointed out was
groundless."

7) Livedoor Co. when searched sent 12 billion yen from account in
another person's name at foreign bank to Livedoor-affiliated
account at major bank in Japan

TOKYO SHIMBUN (Top Play) (Lead Para.)
February 17, 2006

It has been learned that Livedoor Corp. sent about 12 billion yen
from its account in another person's name at a bank in
Switzerland to its affiliate's account at a leading Japanese bank
on Jan. 16 when the company was searched by the special
investigation squad of the Tokyo Public Prosecutors Office on
suspicion of violating the Securities and Exchange Law. The
existence of the account in another person's of the Swiss bank
has been known since it was used by former Livedoor President
Takafumi Horie, 33, and other company's executives, who have been
indicted for violating the securities law, when they sent to it
profit on sale of the company's own stocks conducted the behind
scenes of corporate acquisition. Tokyo prosecutors along with the
Securities and Exchange Surveillance Commission seem to be
investigating the flow of huge remittances and where such money
belongs

8) Lower House to intensively deliberate Livedoor scandal today;
Minshuto determined to continue pursuing money remittance by e-
mail

ASAHI (Page 1) (Full)
February 17, 2006

The House of Representatives Budget Committee will conduct
intensive deliberations on the Livedoor scandal today. In
yesterday's session, Minshuto (Democratic Party of Japan)
lawmaker Yasuhisa Nagata charged that former Livedoor Co.
President Takafumi Horie had instructed his company to send 30

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million yen to the second son of Liberal Democratic Party
Secretary General Tsutomu Takebe prior to the official campaign

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began for the Sept. 11, 2005 Lower House election. Horie has been
indicted for alleged violation of the Security and Exchanges Law.
Takebe denied the allegation. Minshuto plans to continue pursuing
the relationship between Takebe and Horie and demand Takebe and
his son be summoned to the Diet as unsworn witnesses.

Minshuto President Seiji Maehara said before the party's Lower
House members yesterday:

"As soon as we obtained (the information),we judged it to be
highly credible. We are going to pursue the aptitude of Mr.
Takebe as secretary general and the responsibility of Prime
Minister Koizumi, who has appointed Takebe as secretary general."

According to Minshuto, the party has conducted a follow-up
investigation into the information obtained by Nagata about 10
days ago. Nagata told a press conference yesterday:

"Ethically speaking, if a family member extremely close (to Mr.
Takebe) had received black money from Horie, that would be
extremely grave politically."

Meanwhile, an LDP Budget Committee director presented to a
Minshuto director seven questions urging Nagata to verify facts.
Takebe is considering responses, such as submitting to the Budget
Committee board of directors a letter denying the alleged
transfer of the money.

Diet Affairs Committee Chairman Hiroyuki Hosoda emphatically said
to reporters: "Secretary General Takebe has expressly denied the
allegation. Mr. Nagata must prove the authenticity of the e-
mail."

Another committee member said, "Libel deserves more than a light
punishment."

But some LDP members expressed concern. General Council Chairman
Fumio Kyuma said, "The whole thing seems too sophisticated for a
lie." A mid-level member noted, "If the information was
authentic, it would turn the LDP upside down."

Koizumi: Minshuto's allegation groundless

Prime Minister Koizumi refuted yesterday Minshuto member Yasuhisa
Nagata's allegation, saying: "It is not proper for a Minshuto
lawmaker to bring up a groundless matter at a public venue. It is
also absurd for a committee to take up a matter based on bogus
information." Koizumi was responding to a question from a
reporter at his official residence.

Tokyo District Public Prosecutors Office does not know the
existence of the e-mail

Tokyo District Public Prosecutors Office Deputy Chief Prosecutor
Tetsuo Ito released a statement yesterday saying, "This office
does not know if such an e-mail exists or the allegations are
true."

9) Abe, Aso cautious about making replies at Diet committee
session; Questions focused on historical views

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YOMIURI (Page 4) (Excerpts)
February 17, 2006

Chief Cabinet Secretary Abe and Foreign Minister Aso, both viewed
as post-Koizumi candidates, have come under a heavy questioning
about their historical perceptions of World War II at the Lower
House Budget Committee. They yesterday remained cautious in their
answers without departing from government views, but subtle
differences are detectable in the nuances.

In yesterday's committee session, following former party head
Katsuya Okada on Feb. 14, Ryuzo Sasaki of the Democratic Party of
Japan (Minshuto) took the floor and grilled Abe and Aso on their
historical perceptions.

Their answers to the question of whether the war was one of
aggression drew much attention.

The so-called Murayama statement released (by the Murayama
government) in August 1995 used the word "aggression" to describe
the war. Since then the government, including the current one led
by Koizumi, has used the same historical perception. But there is
a deep-seated criticism in the Liberal Democratic Party (LDP) of
using the word, aggression.

Yesterday, Abe and Aso quoted the Murayama statement and
underlined that as a cabinet member, they sided with the
government view.

In answering the question, Abe did not use the word "aggression."
He stated: "How to define the war is not the government's job.
Isn't it a wise policy to wait for historians to judge it?" Aso
pointed out, "Even (General Headquarters General) McArthur once
acknowledged that it's difficult to describe the war as one of
aggression in every aspect," indicating that there are various
views of the war.

Both cabinet members appeared to be trying in their respective
expressions to highlight the LDP's identity as post-Koizumi
candidates.

Besides answering questions about the Tokyo War Crimes Tribunal
(Tokyo Trials),Abe and Aso presented their respective views,
keeping in mind Japan's position of having accepted the decisions
by Tokyo Trials.

Aso cited former Foreign Minister Mamoru Shigemitsu, one of the
Class-A war criminals, who, after the war, was awarded the first
class medal, to unfold his pet argument, noting: "They were not
punished in accordance with Japan's domestic laws. Under Japanese
law, they were not viewed as war criminals." Meanwhile, Abe
stated: "They were punished by the Allies. Weren't they forced to
take responsibilities?"

Replies by Chief Cabinet Secretary Abe and Foreign Minister Aso
at yesterday's Lower House Budget Committee session


1. Perception of the war

2. Tokyo Trials/war criminals

3. War responsibility


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Abe

1. How to define a war of aggression is an academic question.
It's not appropriate for politicians or administration officials
to play the role of judge and offer a judgment.

2. War criminals were classified into Class A, Class B and
Class C categories and punished. Some 1,000 persons were
sentenced to death. Even Class-A war criminals were not found
guilty for crimes against humanity.

3. The leaders were responsible for the war. But Class-B and
Class-C war criminals were not responsible to the nation.

Aso

1. On the question of aggression or self-defense, (GHQ General)
McArthur, too, acknowledged that it's difficult to call the war
one of aggression.

2. (Lawyer) Ichiro Kiyose said the validity were questionable.
It's true Japan accepted the court decisions, but under Japanese
law, they were not war criminals.

3. Those who decided to go to war ought to take responsibility.
It's not easy to single out someone as a person to blame.

10) MOFA plans strategic organization to deal with China; Japan-
China Economic Affairs Office to be established in April;
Strengthening measures on intellectual property rights eyed

NIHON KEIZAI (Page 1) (Full)
February 17, 2006

The Ministry of Foreign Affairs (MOFA) has decided to set up a
Japan-China Economic Affairs Office within the ministry in April,
a special organization that will be responsible for economic
talks with China and mapping out an economic strategy toward it.
In view of the present situation, in which bilateral economic
exchanges are deepening, as can be seen in the fact that China in
2004 became Japan's largest trade partner, overtaking the US,
MOFA will strengthen its macroeconomic analysis of the Chinese
economy and handle intellectual property rights issues, starting
with the sales of pirated or fake products by that nation.

The planned office will be established within the Asia-Oceania
Affairs Bureau with about five officials assigned to it. At
present, about 30 officials of the Chinese Affairs Division of
that bureau are responsible for both economic and political
issues with China. However, with an eye on the future of the fast-
growing Chinese economy, MOFA will make this group an independent
entity responsible for economic affairs with that nation, by
involving officials of the Economic Affairs Bureau, which is in
charge of trade affairs.

A budgetary measure for the planned reorganization has already
been earmarked in the fiscal 2006 draft budget. The plan is to
upgrade the office to a division like the North American Affairs
Bureau, where the First North America Division and the Second
North America Division are respectively responsible for political
and economic issues with the US.

Because of Prime Minister Junichiro Koizumi's visits to Yasukuni
Shrine, relations with China remain strained, as can be seen in
the suspension of mutual visits by the leaders of the two
countries.

It has been said that bilateral relations had been cold

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politically but hot economically, but now there is widespread
concern that the relations might become cold politically and cool
economically. The Japan-China Economic Affairs Office is also
intended to hold the impact of political issues on the economy to
a minimum, by separating politics from economic issues.

Japan's trade with China, combining both imports and exports,
totaled approximately 24.9 trillion yen in 2005. China remained
Japan's largest trade partner, as it was in 2004.

Japan mainly exports electric equipment and machine tools to
China and imports mechanical components and textiles. The
government aims to sign a free trade agreement with that nation
in 2010. If realized, trade with China will further increase.

Pirated CDs and fake products are commonplace in China. Japanese
companies are suffering serious damage from the infringement of
intellectual property rights by China. The number of such cases
reached about 1,800 in 2005, up about 50% from the preceding
year.

11) Minshuto finding it difficult to coordinate internal party
position on "China as threat" due to strong objections to use of
such an expression

SANKEI (Page 5) (Excerpt)
February 17, 2006

In a meeting yesterday of Minshuto (Democratic Party of Japan)
foreign and security affairs council, Akihisa Nagashima, who is
the defense minister in the party's shadow cabinet, orally
presented the party's draft views on China: "The rapid
modernization of it military power has made the (Japanese) public
feel its is a practical threat." He reached the judgment that
position China as a "threat" in issuing pragmatic policies in the
foreign and security affairs areas was unavoidable. However,
there is a deep-seated objection to that view in the party, so it
is not clear whether party head Maehara can bring views together.

12) Government, ruling coalition pressuring North Korea via
monitoring of dealings and preparing bill for human rights; Prime
minister still cautious

YOMIURI (Page 4) (Excerpts)
February 17, 2006

The move to pressure North Korea is growing in the government and
the ruling parties given that there appears to be little
prospects of resolving the abduction issue via dialogue with that
country. Prime Minister Koizumi, however, remains cautious about
taking tough steps, so the government and the ruling coalition
have yet to chart a strategy toward North Korea.

Meeting the press yesterday, Chief Cabinet Secretary Abe urged
North Korea to concede, noting: "The only way for North Korea to
be accepted by the international community is to return to the
six-party talks unconditionally and resolve the Japanese
abductees issue."

When asked by reporters to come up with a message for North
Korean leader Kim Jong who has just turned 64, Abe said
sarcastically: "Well, it's his birthday, so 'Happy birthday Mr.

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Kim Jong Il.'"

In reference to the lack of progress on the abduction issue in
the recent round of Japan-North Korea talks on Feb. 4-8, Abe has
noted: "It has become clear that pressure is necessary to resolve
the issue." He already instructed ministries and agencies to step
up such measures as monitoring financial transactions with North
Korea and reviewing tax breaks now applied to the fixed-asset tax
on facilities affiliated with the pro-Pyongyang General
Association of Korean Residents in Japan (Chosen Soren or
Chongryun).

The Experts Council on the Abduction Issue, chaired by Deputy
Chief Cabinet Secretary Suzuki, met yesterday and confirmed that
it would discuss "pressure" measures.

The United States has imposed financial sanctions on North Korea
over its money laundering. Abe and other government officials
have judged it necessary for Japan and the US to work together to
pressure the North to compromise.

Behind their judgment is perhaps the growing call from family
members of abductees urging the government to take a resolute
attitude toward North Korea.

Meanwhile, the Liberal Democratic Party's task force on the
abduction issue yesterday gave approval to an outline of a bill
on human rights in North Korea. According to the bill, if Japan
decides that human rights abuses are not improved in North Korea,
the government is obligated to impose economic sanctions on that
country. This bill is aimed at boosting Abe's popularity.

However, Prime Minister Koizumi continues to prioritize dialogue
over pressure. Some are therefore pointing out a "split" between
Koizumi and Abe over North Korea policy.

13) Japan to begin Iraq troop pullout in late March

YOMIURI (Page 1) (Full)
February 17, 2006

The government yesterday revealed a plan to withdraw Ground Self-
Defense Force troops currently deployed in the southern Iraqi
city of Samawah where they have been engaged in reconstruction
assistance activities. According to the plan, the GSDF will begin
to withdraw its Samawah-based detachment of about 600 troops in
late March. They will move to Kuwait in May and will return home
in July. In late March, the GSDF will send a support group of
about 100 troops to Kuwait and about 10 to Samawah. The Air Self-
Defense Force will remain on airlift missions for the
multinational force after the GSDF's pullout.

The government has sent Foreign Ministry and Defense Agency
officials to the United States, Britain, and Australia to explain
the withdrawal plan. Working-level officials from Japan, the
United States, Britain, and Australia will meet in London around
Feb. 24 for final coordination.

The GSDF will take about two months to complete its pullout and
enter Kuwait to join the support group. In Kuwait, the GSDF will
take two more months or so to pack and wash equipment, including
vehicles, to be quarantined.

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14) Commentary: GSDF Iraq pullout likely even before new gov't
starts

YOMIUIRI (Page 4) (Abridged)
February 17, 2006

The government has now decided to withdraw Ground Self-Defense
Force troops currently deployed in the southern Iraqi city of
Samawah. Meanwhile, however, there is still no knowing when Iraq
will launch a permanent government. This remains a fluid factor
regarding the pullout of the GSDF contingent. The government
wants to begin a withdrawal after obtaining the new government's
consent. But in case the new government's inauguration is
substantially delayed, Japan is also looking into the possibility
of beginning a withdrawal before that from the perspective of
ensuring the safety of GSDF members.

"We still don't know whether the GSDF will pull out before a new
government is launched or whether the new government will be
launched first," a senior official of the Foreign Ministry said
yesterday. "But they could come under terrorist attack when
pulling out, so we can't ignore the British military's moves,"
the official added.

British and Australian forces have been tasked with public
security in Samawah. The British government has already told
other countries that the British military would begin to pull out
in March and would like to complete its pullout in May. Australia
has implied the possibility of extending its troop deployment.
However, the Foreign Ministry official's remarks suggest that it
would be better to withdraw the GSDF troops along with the
British military's scheduled pullout, when considering their
safety.

15) Okinawa lawmakers opposed to Japan-US agreement on Futenma
relocation, call for changes to Henoko plan

TOKYO SHIMBUN (Page 2) (Full)
February 17, 2006

The ruling Liberal Democratic Party yesterday held a joint
meeting of its panels on Japan-US security affairs and base
realignment issues, with Taku Yamasaki presiding. In the meeting,
LDP lawmakers elected from Okinawa Prefecture raised objections
to the recent agreement between Japan and the United States to
relocate the US military's Futenma airfield to a coastal area of
Henoko in the island prefecture's northern coastal city of Nago,
and they called for changes to the plan.

The Okinawa lawmakers called for the government to build an
alternative base in an area south of the shore of Henoko. "Even
if the government tries to push ahead with the Futenma relocation
to the coastal area, local communities won't agree," Kozaburo
Nishime, a member of the House of Representatives, said. Chiken
Kakazu, a member of the House of Representatives, also stressed,
"If the government pushes for it, we will be driven into a
corner."

In the meeting, Kazuo Ofuru, director general of the Defense
Policy Bureau at the Defense Agency, explained that the Japanese
and US governments agreed on the coastal plan in view of various

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factors, such as possible impacts on the living environment and
nature. The defense official clarified that the agency would not
alter the agreed plan. However, Okinawa lawmakers voiced their
anger, with one of them implying that all of Okinawa's population
would cry out against the coastal plan.

16) Public works; Finance Ministry considering cutback in ratio
to GDP to constrain amount to level on par with European and
American nations

NIHON KEIZAI (Top Play) (Excerpts)
February 17, 2006

In an effort to constrain public works spending, the Ministry of
Finance (MOF) has started looking into the possibility of setting
a new numerical target, using gross domestic product (GDP) as a
benchmark. Allocations for government-sponsored public works in
the fiscal 2006 general-account draft budget stand at
approximately 7.2 trillion yen, achieving the Koizumi
administration's target of reducing the amount of such works to
the fiscal 1990 level. MOF views that a further constraint on
public works, also including those carried out by local
governments, would be imperative to bring about sound finances. A
plan to constrain public works to about 1% of GDP, one-third of
the present level and on a par with the other industrialized
countries, has been floated.

Proposal for cutting public works to one-third of present level
also made

MOF wants to include the new numerical target in a roadmap for a
package reform of expenditures and revenues, which the government
will compile in June. Coordination of views with other government
agencies, including the Ministry of Land, Infrastructure, and
Transport, has started.

Government-sponsored public works spending in the fiscal 2002
budget, the first budget compiled under the Koizumi
administration, was cut 10% from the previous year's level and
then continued to drop 3 % -4% a year after that. Allocations in
the fiscal 2006 budget were reduced to half of the amount of
fiscal 1998 - 14.9 trillion yen. Public works spending peaked in
fiscal 1998.

The government has, however, set a target of moving the primary
balance into the black by early 2010. Private-sector members of
the Council on Economic and Fiscal Policy have calculated that in
order to achieve that target without hiking taxes, it would be
necessary to cut combined expenditures by the national and local
governments by 20 trillion yen. MOF is of the opinion that
cutbacks on public works expenditures, the second largest
spending item following social security, will be unavoidable, as
a senior official put it.

17) US revokes permit of yet another meatpacking facility due to
Beef Export Verification violations

ASAHI (Page 12) (Full)
February 17, 2006

The US government has revoked its permit of one of the 38
meatpacking facilities authorized to handle Japan-bound beef, the

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Agriculture, Forestry and Fisheries Ministry announced yesterday.
The facility in question is a plant in Nebraska belonging to
Swift and Company, a major meatpacker. The US government's step
followed the revelation of Beef Export Verification violations by
the facility.

Shortly after Japan decided to lift its ban on US beef in
December, the US government authorized 40 facilities to export
beef to Japan. But the US government has already delisted two
facilities that had shipped beef to Japan without removing the
vertebral column, an SRM. A series of revocations of license by
the US government is likely to increase Japanese consumers'
distrust in the safety of US beef.

SCHIEFFER