DAILY SUMMARY OF JAPANESE PRESS 02/23/06

UNCLAS SECTION 01 OF 06 TOKYO 000957

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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

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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

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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.

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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,

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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

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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