Cablegate: Japanese Morning Press Highlights 06/16/06

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TAGS: OIIP KMDR KPAO PGOV PINR ECON ELAB JA

SUBJECT: JAPANESE MORNING PRESS HIGHLIGHTS 06/16/06

Index:

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

Defense and security issues:
4) Prime Minister Koizumi in an unusual move taking Defense
Vice Minister Moriya with him on his US trip
5) Japan, told by British that public-safety authority may be
transferred to Iraqi forces, will start pulling out GSDF troops
perhaps this month
6) 84 being punished in DFAA bid-rigging scandal
7) Japan agrees to US request for Yokosuka port dredging to
accommodate nuclear-powered carrier when it arrives

8) LDP's Yamasaki puts off planned trip to North Korea

ODA for "weapons":
9) One-day late but Japan, Indonesia finally sign exchange of
notes on controversial patrol-boat grant
10) Voices challenge appropriateness of using ODA to supply
patrol boats

BOJ on Diet hot seat:
11) BOJ Governor apologizes, admits investment in Murakami Fund,
refuses to resign
12) Koizumi will not replace Fukui as BOJ governor, but
opposition wants his resignation

Political agenda:
13) Koizumi will not name a successor when he steps down as
prime minister
14) Prime Minister's final question-answer session in Diet
brings out his mellowness
15) Rumors of one more Koizumi "surprise" abound, ranging from
surprise visit to Iraq, third trip to Pyongyang
16) Rumor that Fukuda may pull out of the LDP presidential race
17) Interim report by non-partisan Diet panel seeks funding for
national war memorial

18) Food Safety Commission to look into imports of beef from
Chile, Mexico, etc., and not just US

Articles:

1) TOP HEADLINES

Asahi:
In meeting with Mori on LDP presidential race, Koizumi clearly
tells him that he will not designate his successor

Mainichi, Yomiuri, and Sankei:
BOJ Gov. Fukui apologizes for causing stir over Murakami Fund
investment but rejects calls to resign; Fails to show profit from
investment

Nihon Keizai:
Communications Ministry eyes making it mandatory for telecom
carriers to open wireless communication networks to others to
increase new entrants and competition

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Tokyo Shimbun:
Social Insurance Agency mishandled 400 cases in FY2005

2) EDITORIALS
Asahi:
(1) BOJ governor's apology not enough
(2) Jikei University School of Medicine's hospital equally
guilty for allowing reckless surgery

Mainichi:
(1) Diet session to end: Who is responsible for the lost 150
days?
(2) Okinotorishima separate from Takeshima/Dokdo issue

Yomiuri:
(1) Can revised building standards law prevent building code
violations?
(2) BOJ head must be above suspicion

Nihon Keizai:
(1) For boosting tourism, attractive sites more important than
new investments
(2) Medical reform must continue

Sankei:
(1) Ruling on botched surgery sounds alarm against medical world
(2) Japan must take initiative at IWC meeting with scientific
logic

Tokyo Shimbun:
(1) Japan's credibility harmed by BOJ chief Fukui's conduct
(2) Is nuclear-powered aircraft carrier really safe?

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, June 15

NIHON KEIZAI (Page 2) (Full)
June 16, 2006

10:36
Met at Kantei with Chief Cabinet Secretary Abe, followed by
Deputy Chief Cabinet Secretary Suzuki.

13:00
Attended Upper House Budget Committee session.

16:47
Met at Kantei with Administrative Reform Minister Chuma and
Administrative Reform Promotion Office Chief of Secretariat
Matsuda, attended by Deputy Chief Cabinet Secretary Futahashi.
Met later with Financial Affairs Minister Yosano and Cabinet
Office's Director General Takahashi.

17:29
Posed for a group photo with World Economic Forum President
Schwab and others. Attended reception of WEF on East Asia.

19:06
Met at Haneda Airport the Emperor and Empress, who returned from
overseas trip.

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19:56
Met with former Prime Minister Mori at Akasaka Prince Hotel.

21:02
Returned to his official residence.

4) Vice defense minister going along with Koizumi to US as
security aide-de-camp

ASAHI (Page 4) (Full)
June 16, 2006

Prime Minister Koizumi will have Defense Agency Administrative
Deputy Director General Takemasa Moriya accompany him on his
upcoming US trip scheduled for late this month. Koizumi will meet
with US President Bush on June 29, and the two leaders are
expected to talk about the realignment of US forces in Japan and
the situation in Iraq as well. Moriya is expected to serve as
Koizumi's aide-de-camp in the area of security affairs.

Moriya was a key player in a series of talks with the United
States over the US military realignment. In past Japan-US
summits, however, the Foreign Ministry used to be on the front.
It is extremely rare for an administrative deputy director
general of the Defense Agency to accompany a prime minister to
the United States.

"Even the Foreign Ministry's administrative vice minister is not
going, so it's unprecedented," a senior official of the Defense
Agency said. "The two countries' leaders are now very much
concerned about defense issues, I guess," the official added.

5) British forces to transfer security powers to Iraq; GSDF may
pull out this month

YOMIURI (Page 1) (Full)
June 16, 2006

The British government has told the Japanese government that
Britain will announce plans on June 15 to transfer security and
administrative powers from the multinational force to the Iraqi
government in the southern Iraqi province of Al Muthanna, which
includes Samawah, where a Japanese detachment of Ground Self-
Defense Force troops has been deployed to assist with Iraq's
reconstruction, officials said yesterday. Britain would like to
transfer the powers immediately after announcing the plan,
according to the officials. In response, the government has
entered into coordination to make a decision late this month on
the GSDF detachment's withdrawal. Four countries-Japan, the
United States, Britain and Australia-will shortly hold a meeting
of working-level officials in London to coordinate their views.

The United States, Britain, and other multinational force members
have been holding informal meetings with the Iraqi government to
look into the possibility of transferring security and
administrative powers in each province of Iraq. The multinational
force and the Iraqi government have agreed that it would be
possible to transfer the powers at an early date in the province
of Al Muthanna, where the GSDF has been operating, according to
officials.

According to Japanese government officials, the Iraqi government

TOKYO 00003337 004 OF 011

and the multinational force will hold a meeting of their powers
transfer committee after reaching a general agreement in their
informal meeting. The committee is made up of Iraqi cabinet
ministers, including the defense minister and the interior
minister, and the commanders of US and British forces in Iraq and
the US and British envoys to Iraq. The Iraqi government and the
multinational force, after reaching a final agreement, will
announce when to transfer the powers, according to the officials.

The Japanese and British governments recently held a meeting of
their officials to consult on when to announce the transferal. In
the meeting, the British government told the Japanese government
that Britain would like to announce the transferal of security
powers on June 20 and that the Australian government has also
basically agreed to do so. This is believed to based on the
results of their informal meetings. Japan and Britain will now
enter into final coordination with the United States, which is
the core of the multinational force.

The Japanese government will make a formal decision on the GSDF's
withdrawal when the transferal of powers is determined. The
government would like to start withdrawing the GSDF troops in
late June at the earliest along with the Samawah-based British
and Australian forces. The government is making preparations for
the GSDF's pullout from Samawah in about 30-35 days. The GSDF
troops will move to Kuwait in late July and will return home
thereafter if Japan's coordination with the multinational force
members is well under way and the GSDF is ready to pull out.

6) All-time high of 84 officials punished over DFAA bid-rigging
incident; Investigative committee report blames amakudari

TOKYO SHIMBUN (Page 1) (Excerpt)
June 16, 2006

The Defense Facilities Administration Agency (DFAA) Investigative
Committee (chaired by DFAA Director General Iwao Kitahara), which
has investigated bid-rigging cases led by its officials,
yesterday released a report noting that an attempt to secure
posts for retiring DFAA officials was behind the wrongdoings. The
report, however, failed to clarify the full picture of the
incident, with the question whether cost estimates for
construction projects were leaked or not remaining vague.
Following the report, the DFAA took disciplinary action against
52 officials, including the demotion of Construction Department
Director General Toshiaki Kawano, who ordered the scrapping of
order-placement lists, by two levels, and a warning to Director
General Kitahara. Thirty-two Defense Agency officials, including
Director General Takemasa Moriya, were disciplined. The
punishment of a total of 84 personnel is the largest for the JDA
and DFAA.

7) Japan to renovate Yokosuka Port for US nuclear flattop

ASAHI (Page 4) (Full)
June 16, 2006

Japan and the United States held a meeting of their
intergovernmental joint committee yesterday and agreed that the
Japanese government will dredge the Port of Yokosuka in Kanagawa
Prefecture to berth the USS George Washington, a nuclear-powered
aircraft carrier to be deployed to the US Navy's Yokosuka base in

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2008.

8) LDP's Yamasaki puts off visit to North Korea

Taku Yamasaki, former vice president of the ruling Liberal
Democratic Party, has now made up his mind to postpone his
scheduled visits to North Korea and South Korea for the time
being. Yamasaki had planned to leave Japan on June 20 for the two
countries. "I will postpone my foreign trip," Yamasaki said in a
general meeting of his intra-party faction yesterday. "I will
work on our (faction's) policy proposals," he added.

9) Provision of patrol boats to Indonesia: Signing ceremony held
one day behind schedule with Japan's concessions to Indonesia's
request for creating supplementary document

YOMIURI (Page 2) (Full)
June 16, 2006

Etsunari Kurose, Jakarta

The signing ceremony for a letter of agreement on Japan's offer
of three patrol boats in grant aid to Indonesia, which had been
suspended due to the Indonesian government's objection, was held
in Jakarta yesterday one day behind schedule.

According to sources from both governments, Indonesia raised an
objection to the restricted use of the patrol boats for such
purposes as antiterrorism at sea and antipiracy, but afterwards,
both the governments reached a compromise on creating a
supplementary document that will give consideration to
Indonesia's request instead of modifying the agreement and
signing the document.

According to an Indonesian Foreign Ministry official, the
supplementary document states that the patrol boats shall be used
for comprehensive purposes under the peacekeeping framework for
the Strait of Malacca as agreed on in August 2005 among
Indonesia, Malaysia, and Singapore, in accordance with the United
Nations Convention on the Law of the Sea, and under Indonesia's
control.

Japanese Ambassador to Indonesia Shin Ebihara said firmly: "The
supplementary document is not contradictory to the agreement that
restricts the use of patrol boats."

On the other hand, an Indonesian Foreign Ministry official
commented, "The security measures for the Strait of Malacca
include the securing of safe navigation and the preservation of
the environment, so we need to grapple with the security matters
from various angles," implying a possible expansion of the
purposes of the use of the patrol boats.

10) Some are skeptical of the restricted use of patrol boats,
saying it may not meet international standards

YOMIURI (Page 2) (Full)
June 16, 2006

Japan decided to provide patrol boats to Indonesia as an
exception to Japan's three principles banning weapons exports,
and in following the procedures for this provision, Indonesia

TOKYO 00003337 006 OF 011

raised an objection to the restricted use of the boats for such
purposes as antiterrorism at sea and antipiracy. Analyzing this
objection, many in Japan said: "Perhaps Indonesia was concerned
that the limited use would bring about inconvenience about the
use of the boats." An exception was added to the three principles
in 2004 when the government reviewed them, but a Liberal
Democratic Party (LDP) member cast doubts, saying: "It may be too
strict to meet international standards."

Senior Vice Foreign Minister Yasuhisa Shiozaki told a news
conference yesterday: "We were interrupted by technical matters.
It's absolutely not that some problem arose about the three
principles banning weapons exports." A senior Foreign Ministry
official likewise emphasized: "No modification was made to the
agreement both sides signed. The conditions set by Japan, such as
limiting the use of the boats to antiterrorism and antipiracy,
should be observed."

11) BOJ Governor Fukui's investment in Murakami Fund: Determined
to perform his duties; Apologizes over all the fuss; Reveals
possession of stock in several companies

YOMIURI (Top Play) (Lead para.)
June 16, 2006

The Upper House Budget Committee yesterday held an intensive
deliberation on the issue of Bank of Japan Governor Toshihiko
Fukui having invested 10 million yen in the Murakami Fund. Fukui
indicated his perception that in compliance with the BOJ internal
regulations, there was no problem about his continued investment
in the fund led by Yoshiaki Murakami even after taking office as
BOJ governor. Murakami was arrested on suspicion of violating the
Securities and Exchange Law. Fukui later told a news conference
that he wants to continue his duties as BOJ governor. He thus
stressed that he had no intention of stepping down. Prime
Minister Koizumi expressed his acceptance of Fukui's account, but
the opposition camp is strongly opposing this stance of the prime
minister.

12) Koizumi on fund flap involving BOJ Governor Fukui: "I am not
thinking about replacing him"

TOKYO SHIMBUN (Page 2) (Full)
June 16, 2006

Asked by reporters about the future course of Bank of Japan (BOJ)
Governor Toshihiko Fukui over his investment in the Murakami
Fund, Prime Minister Junichiro Koizumi categorically said at his
official residence yesterday afternoon: "I am not thinking about
replacing him." On Fukui's replies in a meeting of the House of
Councillors Budget Committee yesterday, Koizumi said: "I
understand his explanations. As long as he abides by the BOJ
rules, there is no problem."

In this connection, Chief Cabinet Secretary Shinzo Abe also
indicated in a press conference the same day that his resignation
would not be necessary. He said: "I generally understood (the
replies by Fukui). I hop he will continue to properly fulfill his
duty, based on public confidence."

In the recording of a TV program yesterday, Minshuto President
Ichiro Ozawa lashed out at Fukui's continued investment in the

TOKYO 00003337 007 OF 011

Murakami Fund even after assuming the present post, saying: "It
is inconceivable that he continued (the investment) even after
assuming office as BOJ president. He should feel great
responsibility."

After the taping, Ozawa told reporters: "His action, if it is
found true, is the ultimate insider trading. He should
voluntarily resign, instead of doing so by being told by others."

Japanese Communist Party Chairman Kazuo Shii and Social
Democratic Party President Mizuho Fukushima also said that Fukui
should resign. Rengo (Japanese Trade Union Confederation) also
issued a statement calling for his resignation.

13) Koizumi tells Mori he has no intention to name his successor

ASAHI (Top Play) (Excerpts)
June 16, 2006

The current session of the Diet will essentially end today with
no extension of its term, which will formally expire on June 18.
Now the three-month-campaign for the September Liberal Democratic
Party (LDP) presidential race will move into full swing. Prime
Minister Junichiro Koizumi last night told former Prime Minister
Yoshiro Mori that he would not name a successor. At present,
Chief Cabinet Secretary Shinzo Abe, who is regarded as a
successor to the Koizumi reform drive, aims to replace Koizumi.
With former Chief Cabinet Secretary Yasuo Fukuda in mind, LDP
forces seeking an end to the Koizumi reform line are now trying
to form a group opposing Abe. Many in the non-Abe group are
strengthening their calls urging Fukuda to make his position
clear.

Koizumi met last night with Mori, who heads the largest faction
of the LDP, to which Abe and Fukuda belong, at a Tokyo hotel, and
they exchanged views for about one hour on the party leadership
race. Mori had hoped to hold a meeting with Koizumi in an attempt
to prevent factional discord, as well as to avoid turmoil in the
LDP.

With Koizumi's remark that he will clarify for whom he will vote
in mind, Mori told Koizumi:

"I think you should refrain from announcing your choice for the
next LDP president. All (post-Koizumi contenders: Abe, Fukuda,
Foreign Minister Taro Aso, and Finance Minister Sadakazu
Tanigaki) have supported you. I want you to consider this point."

Koizumi then replied, "Let's not mention the name of the next
president." He added: "I left the faction and assumed the prime
minister's post. I no longer can return to the faction." He
indicated that he would not return to the Mori faction after he
steps down from his post.

14) "Things that look ruthless are beneficial for the people, and
they will understand that in the future," says Koizumi in his
last committee session

MAINICHI (Page 2) (Full)
June 16, 2006

"I have been conducting politics, believing that things that may

TOKYO 00003337 008 OF 011

look ruthless on the surface are in fact beneficial for the
people of Japan and that the public will understand that in the
future."

Prime Minister Junichiro Koizumi summed up his performance this
way in the House of Councillors Budget Committee session
yesterday, his last as premier.

It has been over five years since he took office in April 200l.
Koizumi has handled Diet interpellations aggressively and
defiantly at times, saying at one point, "It's not a big deal to
break a promise of this level."

In yesterday's session, Minshuto (Democratic Party of Japan)
member Yasuhiro Tsuji criticized the growing social disparity,
saying, "We don't believe in a small government." Koizumi brushed
aside Tsuji's view, stating: "A big government will force a
greater tax burden on the people. With such a public pledge, I
don't thing Minshuto can take over the reins of government."

In response to questions from members of the Japanese Communist
Party and the Social Democratic Party, Koizumi also stated
bluntly: "We have been in power because we are entrusted by a
majority of the people who have all sorts of views."

Above all, yesterday's highlights were Bank of Japan Gov.
Toshihiko Fukui's investment in the Murakami Fund and the Social
Insurance Agency's irregularities regarding national pension
premiums. Questioners grilled the top officers of the two
organizations, appointed by Koizumi. The session broke off four
times over answers by Fukui and others. Forced repeatedly to wait
for the session to resume, Koizumi looked gloomy in his last
committee session.

15) Will Koizumi visit North Korea or Iraq as another surprise?

TOKYO SHIMBUN (Page 2) (Full)
June 16, 2006

Attention is being focused on what Prime Minister Koizumi will do
before he steps down in September after the current Diet session
adjourns today. The prime minister has in the past astonished the
people by suddenly visiting North Korea and by making unexpected
personnel decisions. Will there be another surprise?

Asked by reporters the other day about how he would spend the
summer, the prime minister made this reply: "I have a lot of
things to do. There are a huge backlog on the policy agenda,
including foreign, domestic, economic, and fiscal issues."

The prime minister is scheduled to visit the US and Canada
starting on June 27. After having the Basic Policies for Economic
and Fiscal Management, with which the Koizumi reform initiative
will be completed, adopted at a cabinet meeting on July 7, he
will make an overseas trip to attend the G-8 summit (St.
Petersburg Summit) in Russia in mid-July.

Afterward, however, there is nothing major on the calendar until
Sept. 12, the expected date of the Liberal Democratic Party
presidential election. But the prime minister adamantly rejected
an extension of the Diet session. Given this, speculation has
been rife that he might be planning some surprise.

TOKYO 00003337 009 OF 011

Some talk about a possible visit to Iraq to encourage Self-
Defense Force (SDF) troops. This conjecture floated whenever he
made an overseas trip, but US President Bush's sudden visit to
Iraq on June 13 has revived such speculation. The prime minister,
though categorically denied the possibility on June 14. A close
aide to Koizumi made this explanation: "SDF troops have been
dispatched to help the entire nation of Iraq. If the prime
minister goes there to encourage SDF troops, it could give the
wrong impression that the SDF are the focus of his attention."

In addition, SDF members are not allowed to use armed force
overseas, so if Koizumi decides to visit Iraq, the government
will have to ask other countries' troops to guard him. As it
stands, there are many hurdles to clear in order to bring about
an Iraq visit by the prime minister.

Also a topic of speculation is a third visit to North Korea. In
the past two visits, Koizumi succeeded in getting North Korean
President Kim Jong Il to admit that Pyongyang had abducted
Japanese citizens and to allow five abduction victims and their
families to return to Japan. Later, the abduction and nuclear
development issues reached an impasse. Some speculate that the
prime minister might visit North Korea to break the impasse on
these issues.

Although Koizumi has not completely ruled out the possibility,
saying: "I'm not considering it now," his aide said: "The prime
minister will visit North Korea only when the two countries
normalize diplomatic ties. " Since the prime minister has
indicated that he does not necessarily aim at resolving the
abduction issue before leaving office, this possibility is also
seen as extremely slim.

On a visit to Yasukuni Shrine this year, many anticipate that the
prime minister will visit the shrine on Aug. 15, as he pledged in
the LDP presidential election campaigning in 2001. Some officials
are quoted as saying that a visit to the shrine on the day
marking the end of World War II will no longer be a surprise.
Rather, visits to China and South Korea to improve the strained
relations, instead of Yasukuni Shrine, would be more of a
surprise.

16) Former Chief Cabinet Secretary Fukuda declines to deliver
speech at study meeting, fueling speculation that he may not run
in presidential race

MAINICHI (Page 5) (Full)
June 16, 2006

By Yoshiaki Nakagawa, Ryuko Tadokoro

Yasuo Fukuda, a member of the Liberal Democratic Party (LDP) and
former chief cabinet secretary, yesterday revealed that he had
declined to deliver a speech at the Asia Study Council planned
for June 20. When asked about the reasons by reporters, Fukuda
told them: "If the council intends to invite contenders (for
premiership) equally to its gathering, I am not among them. I am
not qualified." Anti-Koizumi lawmakers of the LDP are pushing
Fukuda to clarify his plans at an early date, but this decision
not to give a speech is fueling speculation. For instance, a
veteran lawmaker noted: "Mr. Fukuda may be thinking about backing

TOKYO 00003337 010 OF 011

out of the presidential race."

The council planned to have Fukuda as a guest speaker on June 20,
but Fukuda, upon returning from New Zealand on June 13, told a
leading member of the council about his refusal to deliver a
speech. After deciding to invite Fukuda to its meeting as a guest
speaker, the council invited Chief Cabinet Secretary Shinzo Abe,
Foreign Minister Taro Aso, and Finance Minister Sadakazu Tanigaki
to separate meetings as guest speakers.

According to a lawmaker close to Fukuda, Fukuda told him, "I
can't attend something like a speech meeting for the presidential
race. Those who want to attend it should attend," and he did not
made any commitment. Former Prime Minister Yoshiro Mori
complained to New Komeito Upper House Caucus Chairman Shozo
Kusakawa: "Mr. Fukuda stays mute."

A sense of disappointment is spreading among veteran lawmakers
who have urged Fukuda to clarify his attitude. A former cabinet
member of the LDP said: "If Mr. Fukuda has no intention to run,
we need to put up someone to replace him."

17) Parliamentary group's interim report calls for allocation of
money for feasibility study of new war memorial, says official
visits to Yasukuni Shrine are unconstitutional

SANKEI (Page 4) (Excerpts)
June 16, 2006

A nonpartisan group of lawmakers from the ruling Liberal
Democratic Party (LDP), New Komeito, and the main opposition
party Minshuto (Democratic Party of Japan) yesterday compiled an
interim report calling on the government to build a secular
national peace memorial to honor those who died in war. Taku
Yamasaki heads the group. The interim report stipulates that
funding for a feasibility study should be allocated in fiscal
2007. It also points out that official visits to Yasukuni Shrine
by the prime minister and state ministers are unconstitutional.

The contents of the report are similar to one formulated in
December 2002 by an advisory panel to then Chief Cabinet
Secretary Yasuo Fukuda. The 2002 report stressed that when state

SIPDIS
officials honor the war dead, they should give full consideration
to other countries, especially to the sentiments of neighboring
countries. It also called on the government to conduct a
feasibility study on the name, nature, and location of a new
facility.

18) Japan to conduct BSE testing on beef from additional
countries; Mexican, Chilean beef to be subject to inspection

ASAHI (Page 2) (Full)
June 16, 2006

The Food Safety Commission yesterday began considering the
possibility of conducting BSE testing on beef imported from
various countries. Products from Mexico, Chile, and China, whose
imports have sharply increased due to the embargo against US and
Canadian beef, will become subject to this policy. The panel will
formally make the decision after hearing opinions from the Prion
Expert Council; the Ministry of Health, Labor, and Welfare; and
the Ministry of Agriculture, Forestry, and Fisheries.

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In fiscal 2005, 97.4% of beef imported by Japan was from
Australia (approximately 410,000 tons), followed by New Zealand
(approximately 40,000 tons). Mexico ranked third with 7,426 tons,
940 times the level of fiscal 2003. Imports from Chile, which
ranked fourth, also markedly increased to 2,680 tons, 44 times
the level of the same year. Imports form China stood at 376.9
tons, but the largest portion of more than 10,000 tons of
materials for beef-related products, such as hamburgers and beef
bowls, was from this country.

No BSE cases have been reported in those countries.

SCHIEFFER

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