DAILY SUMMARY OF JAPANESE PRESS 02/23/06

UNCLAS SECTION 01 OF 06 TOKYO 000957 SIPDIS SIPDIS DEPT FOR E, P, EB, EAP/J, EAP/P, EAP/PD, PA WHITE HOUSE/NSC/NEC; JUSTICE FOR STU CHEMTOB IN ANTI-TRUST DIVISION; TREASURY/OASIA/IMI/JAPAN; DEPT PASS USTR/PUBLIC AFFAIRS OFFICE; SECDEF FOR JCS-J-5/JAPAN, DASD/ISA/EAPR/JAPAN; DEPT PASS ELECTRONICALLY TO USDA FAS/ITP FOR SCHROETER; PACOM HONOLULU FOR PUBLIC DIPLOMACY ADVISOR; CINCPAC FLT/PA/ COMNAVFORJAPAN/PA. E.O. 12958: N/A TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA SUBJECT: DAILY SUMMARY OF JAPANESE PRESS 02/23/06 INDEX: (1) Minshuto member Nagata to resign from Diet to take responsibility over Horie e-mail; Party leaders trying to dissuade him (2) Resignation of lawmaker Nagata a serious blow for Minshuto; Leaders see inevitable loss of internal cohesion (3) Japan's new initiative to gain permanent seat on UNSC: US remains cold; No solution in sight; Visiting German Foreign Minister urges Japan to come back to G-3 framework; Difficult to secure seat by Sept. (4) Joint command of three self-defense forces to be set up; Japan-US joint exercise to start today (5) US force realignment: Defense Agency to devise new subsidy program to convince local areas (6) FTA: Government to switch strategy from quality to speed: Talks with Chile will be focused on key areas, aimed at catching up with other countries ARTICLES: (1) Minshuto member Nagata to resign from Diet to take responsibility over Horie e-mail; Party leaders trying to dissuade him ASAHI (Top Play) (Lead paragraph) February 23, 2006 Democratic Party of Japan (Minshuto) member Hisayasu Nagata, 36, a House of Representatives member elected in the Minami-Kanto proportional representation bloc, has decided to resign as a Diet legislator. He has already expressed his intention to the party executive. In a Lower House Budget Committee meeting, Nagata alleged that former Livedoor President Takafumi Horie had instructed one of his employees to wire 30 million yen to the second son of Liberal Democratic Party Secretary General Tsutomu Takebe, claiming that he had a copy of the e-mail in question. Unable to present evidence to prove that the e-mail is credible, however, the opposition party has come under fire. Nagata has thus deemed it necessary to take responsibility for the frenzy. DPJ President Seiji Maehara and other party leaders urgently met and decided to leave the issue to the discretion of DPJ Secretary General Yukio Hatoyama. They are attempting to dissuade Nagata from resigning. Takebe's son denies allegations LDP Secretary General Takebe's son issued a comment to media organizations today, noting: "I and my company (1) have not received any money from Horie or Livedoor; and (2) have not opened a bank account overseas." (2) Resignation of lawmaker Nagata a serious blow for Minshuto; Leaders see inevitable loss of internal cohesion YOMIURI (Page 2) (Excerpts) Evening, February 23, 2006 TOKYO 00000957 002 OF 006 Minshuto (Democratic Party of Japan) Lower House lawmaker Hisayasu Nagata has indicated his intention to resign his Diet seat over the controversy of an e-mail money transaction (from Livedoor to the Liberal Democratic Party (LDP)) whose authenticity cannot be proved. This has become a serious blow to Minshuto, which was pursuing the money links as part of a set of four scandalous accusations against the LDP. Minshuto is in a situation now that if Nagata does resign, the responsibility of Diet Affairs Committee Chairman Yoshihiko Noda and party head Seiji Maehara will be called into question (i.e., pressured to resign),but if Nagata is kept on in the party, the cohesiveness of the party under the current leadership will come apart. The situation has drastically changed since a week ago when Nagata on Feb. 16 brought up the e-mail charge in the Lower House Budget Committee accusing LDP Secretary General Takebe of "selling your soul for money." When Nagata suddenly disappeared from public, Minshuto explained that he was searching for new evidence, but the truth was that if he appeared on television and made further remarks, the party feared he would only make things worse, according to a senior party member. He apparently was being kept under wraps. Minshuto avoided arguments over the authenticity of the e-mail, and used a tactic of prioritizing trying to find the trail of money to the son of Takebe. However, Maehara in the party-heads debate on Feb. 22, devoted only the last nine minutes to pursuing the e-mail issue, and left the impression that the Minshuto had reached a cul-de-sac and was trying to cut and run. A sense of disappointment with Maehara spread rapidly. Within the party, there was a sense that the party's image was being damaged, and some members called for Nakata's resignation as the only way to get out of the lurch. But others said that if he quit, it would be an admission that the e-mail was a fake, and that this would lead to the resignations of both Maehara and Noda. One senior member expressed concern about the impact on Diet deliberations now: "Although it is difficult to prove the authenticity of the e-mail, as long as we do not clearly resolve this issue, we cannot move ahead. We will leave the impression that all of the scandals our party is pursuing are bogus." (3) Japan's new initiative to gain permanent seat on UNSC: US remains cold; No solution in sight; Visiting German Foreign Minister urges Japan to come back to G-3 framework; Difficult to secure seat by Sept. TOKYO SHIMBUN (Page 2) (Full) February 22, 2006 In a bid to secure UN Security Council (UNSC) membership, the Japanese government has moved its campaign into full gear to obtain understanding of its new initiative featuring an increase by six in all the number of permanent and semi-permanent member nations. However, the road ahead will be bumpy with the US, Japan's only hope, as well as Germany, Brazil and India (G-3), reacting coldly. Japan's new plan features: (1) a nation that obtained support from more than two-thirds of the UN member nations should be TOKYO 00000957 003 OF 006 eligible for permanent UNSC membership; and (2) a nation that failed to obtain support such should be eligible for semi- permanent membership with renewable tenure longer than that of nonpermanent members (two years, not renewable). Japan and the G-3 at first submitted a resolution calling for increasing the number of permanent seats by 6 and that of nonpermanent members by 4. However, it had to give up the effort because there was no prospect for the resolution to be able to obtain endorsement from two-thirds of the UN members, which is necessary for adoption. The resolution was killed, as the 59th General Assembly adjourned last September. Judging that the primary reason for the defeat was that it was unable to obtain support from the US, Japan has switched to a policy of searching for ways to work in concert with the US. The new initiative gives consideration to the US, which is against the idea of expanding the UNSC framework, with the expansion of seats reduced by 4. The new initiative proposes a rule of leaving nations that have failed to obtain endorsement from two thirds of the UN members in a semi-permanent post, leaving room for allowing the US, which does not like the idea of Germany and some other countries becoming permanent members, to work on other countries to support Japan's bid. However, the US response was cold. Ambassador to the UN Bolton expressed a negative view on Japan's new proposal, "Japan has yet to come up with a proposal that can obtain broad-based support." He thus indicated the US stance of continuing talks on specific measures, though it supported Japan's entry into the UNSC as a permanent member. In the meantime, the G-3 resubmitted the once-killed resolution this January. Visiting German Foreign Minister Steinmeier during a press conference held at the Japan National Press Club on Feb. 21 urged Japan to come back to the G-3 framework, expressing doubts about the feasibility of Japan's new initiative. He noted, "I am confident that the G-3 initiative is a proposal that is most likely to be adopted." Japan intends to seek understanding of the US and the G-3 toward its new initiative, by involving the African Union, which had submitted its own resolution. However, it is difficult for Japan to gain UNSC membership during the 60th General Assembly as it hopes. (4) Joint command of three self-defense forces to be set up; Japan-US joint exercise to start today SANKEI (Page 4) (Full) February 23, 2006 The Self-Defense Forces (SDF) and US forces in Japan will today begin in Tokyo a training drill called Keen Edge, a Japan-US joint Command Post Exercise (CPX). A task force combining the Ground Self-Defense Force (GSDF),the Maritime Self-Defense Force (MSDF),and the Air Self-Defense Force (ASDF) late next month has been formed, characterizing the exercise as preparatory training for the transition to integrated operations of the three forces. The purpose of the exercise is to undertake high-level coordination on such issues as ballistic missile defense and to promote cooperation between Japan and the US. TOKYO 00000957 004 OF 006 This is the 15th time Keen Edge will be held, and it will take place at the Defense Agency and Yokota Air Base through March 3. Approximately 1,350 personnel from the JSDF and about 3,240 from the US Army, Navy, Air Force, and Marine Corps are expected to take part in the exercise. In the CPX, the movements of Japanese and US troops are input into a computer to confirm the appropriateness of the operational plan and the flow of communications. Specifically, Japan and the US will conduct joint operations based on scenarios that involve the defense of Japan and emergencies in areas surrounding Japan. The point of the exercise this time is for the chief of the Joint Staff, a post to be newly created, to command the three forces. Training for the combined joint task force will also be carried out. The ASDF air defense commander will direct missile defense (MD) exercises. The MSDF Self-Defense Fleet commander-in-chief will take the lead in defending against enemy incursions on a remote island. They will also command other SDF units as the leaders of the combined joint task forces. (5) US force realignment: Defense Agency to devise new subsidy program to convince local areas SANKEI (Page 1) (Abridged) February 19, 2006 In order to facilitate the planned realignment of US forces in Japan, the Defense Agency is studying a US force realignment grant system based on the government's program to provide subsidies to local governments which have accepted nuclear power generation facilities. With Japan and the US scheduled to reach a final agreement in March on US force realignment, the agency intends to use the envisaged system as a bargaining chip in persuading local areas. The Defense Agency plans to craft the new subsidy system in outline to make arrangements with relevant agencies in February with a view to presenting it to local areas in March. Measures to revitalize local economies have yet to take shape and local governments have not agreed to accept new base US facilities. Earlier this month, Administrative Vice Defense Minister Takemasa Moriya ordered Defense Agency and Defense Facilities Administration Agency officials to study new steps to revitalize local economies. He has also come up with a plan to make arrangements with the Finance Ministry and the ruling parties later this month. A system to provide subsidies is expected to be the main pillar in the government's new package for local areas. The government has been providing grants to base-hosting communities, which have not levied the property tax and other taxes on US bases and facilities. The grants for fiscal 2005 topped 25.1 billion yen. Apart from the existing system, the government is expected to apply the new program to such municipalities as Okinawa's Nago, the relocation site for the US Marine Corps' Futenma Air Station, Yamaguchi's Iwakuni, which is expected to accept carrier-borne jets from Kanagawa's Atsugi base, and Kanagawa's Sagamihara, TOKYO 00000957 005 OF 006 where a new US Army headquarters known as a Unit of Employment X (UEx) will be established. The Defense Agency's plan is based on the government's system to provide subsidies to municipalities with nuclear or hydro power plants, such as Kashiwazaki in Niigata Prefecture. The grants for power plants for fiscal 2005 total 110 billion yen. Local governments are allowed to use power-plant grants for building public facilities and developing local industries to revitalize their economies once their plans are approved by the central government. The Defense Agency intends to use the envisaged program to soften up the stances of local areas. The agency, however, plans to grant subsidies only to those municipalities that have accepted the relocation of US bases. Since fiscal 2000, the government has invested over 40 billion yen in the northern part of Okinawa in the name of revitalizing the economy there. But the Futenma relocation plan has not realized. The bitter lessons from this case have taught the Defense Agency not to extend grants until after local communities agree to the planned US force realignment. Although affected municipalities in Okinawa and Kanagawa have rejected the realignment plan, some local governments have expressed an interest in the Defense Agency's new subsidy program. The agency intends to incorporate new promotional measures in a US force realignment bill, which the government is considering to submit to the Diet in the current session. The Finance Ministry is putting up strong resistance to implementing the new subsidy program, and the approach of settling the base issue with money has sparked strong skepticism. The envisaged system faces a rocky road ahead. (6) FTA: Government to switch strategy from quality to speed: Talks with Chile will be focused on key areas, aimed at catching up with other countries ASAHI (Page 12) (Full) February 23, 2006 The government will switch its strategy for signing free trade agreements (FTAs) from quality to speed. It has thus far aimed for quality economic partnership agreements (EPA) that included not only the abolition of tariffs but also liberalization of investment and the opening of the labor market. However, amid the growing trend for the signing of FTAs throughout the world, it will promote talks with India, South America and Middle East nations with focus on key trade areas, as a certain senior Foreign Ministry (MOFA) official noted, "We will abandon perfectionism." The first round of FTA talks with Chile will start today. Chile takes a positive stance toward FTAs. It has already signed such an agreement with 36 nations, including the US, the EU, China and South Korea. A survey by the Japan Automobile Manufacturers Association (JAMA) found that South Korea's sales of autos to Chile extensively grew in 2005, up 40% from the preceding year, since it signed an FTA with that nation in April 2005. A JAMA official lamented, "Chile's imported car market is TOKYO 00000957 006 OF 006 growing, but that nation imposes a tariff of 6% on Japanese cars, which is a competitive disadvantage." The Japanese government intends to speed up negotiations with Chile so as to quickly dissolve such a situation disadvantageous to Japanese companies. Japan has thus far aimed for the conclusion of quality FTAs in various fields, mainly with the Association of South-East Asian Nations (ASEAN),with which it has close economic ties. However, efforts to conclude quality agreements are time- consuming, as negotiation areas for such an agreement involve various government agencies. Talks with ASEAN as a whole, which kicked off last April, suffered a setback at the outset due to a clash of views between the two sides. Japan locked horns with South Korea, as well, over a reduction in tariffs on agricultural products. Overall talks have been suspended since Nov. 2004. As a result, in FTA talks with ASEAN, China and South Korea have gone ahead of Japan, by giving priority to a cut in tariffs on mined and manufactured goods. Business circles are concerned that Japan will be left behind the global trend, as a senior Japan Business Federation official noted. An increasing number of Liberal Democratic Party (LDP) members are calling for focusing on trade in resources. In response, the government has shifted an FTA strategy to giving priority to speed. It will aim to launch talks with India as early as this summer. It is also looking into the possibility of talks with the Gulf Cooperation Council (GCC),consisting of oil- producing countries in the Middle East, and South Africa. It has also begun considering Australia as an FTA negotiation partner. Talks with that nation will likely encounter complications over agricultural, forestry and fisheries products. Talks focused on priority areas, such as an investment environment, will likely increase. SCHIEFFER