Cablegate: Japanese Morning Press Highlights 06/21/06

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UNCLAS SECTION 01 OF 11 TOKYO 003440

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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: JAPANESE MORNING PRESS HIGHLIGHTS 06/21/06

Index:

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

Iraq pullout:
4) Text of Prime Minister Koizumi's press remarks on GSDF
withdrawal from Iraq
5) ASDF next month likely to expand transport services in Iraq
6) With withdrawal of GSDF from Iraq, Japan will now shift to
energy development assistance centered on ODA
7) As GSDF leaves Iraq, Chief Cabinet Secretary Abe voices
preference for permanent SDF dispatch law to replace limited
timeframe measures

8) US, leaning toward hard-line stand toward North Korea on
missile launch issue, schedules talks with Japan to strengthen
pressure on Pyongyang

9) Japan, US, Taiwan strengthening ties at think-tank level to
deal with China "threat"

Beef talks:
10) Agreement almost there between US, Japan on resumption of US
beef imports, with shipments likely to start in July
11) US beef could be on supermarket display counters by late
July
12) Yoshinoya planning beef bowls on menu in September, but much
of food service industry remains cautious about US beef
13) Government in resuming US beef imports steamrollering
objections of consumers, who remain concerned about food safety

Political agenda:
14) Shinzo Abe to declare candidacy for LDP president in later
August
15) Ruling camp fears public reaction to BOJ Governor Fukui's
admission of profiting from Murakami funds, while opposition
wants him to quit
16) Minshuto (Democratic Party of Japan) puts off punishment of
lawmaker Matsui for allowing Murakami Fund to pay aide's salary

Articles:

1) TOP HEADLINES

Asahi & Yomiuri:
BOJ Governor Fukui earned 14.73 million yen from investment in
Murakami Fund

Mainichi & Tokyo Shimbun:
Supreme Court says "indefinite sentence clearly unjust," orders
High Court to reexamine murder case with a view to imposing death
penalty

Nihon Keizai:
BOJ governor: BOJ will take quick, nimble action on monetary
policy; Zero-interest policy expected to be kept in place for now

Sankei:
People's New Party's House of Representatives member Itokawa
pressured by construction firm employees not to "pursue" land

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deal in Diet interpellations

2) EDITORIALS

Asahi:
(1) SDF pullout from Iraq: Ends do not justify the means
(2) BOJ: Weightiness of governor's position

Mainichi:
(1) GSDF withdrawal from Iraq: Expanding reconstruction
assistance to Samawah
(2) BOJ Governor Fukui: System needed that does not give rise to
suspicions

Yomiuri:
(1) SDF troops in Iraq: Pullout from Samawah does not mean an
end to assistance
(2) BOJ Governor Fukui's investment profit: Job may be in
jeopardy if confusion continues

Nihon Keizai:
(1) We welcome decision to pull out GSDF troops from Iraq
(2) BOJ Governor Fukui faces tough task in restoring public
trust

Sankei:
(1) Pullout of GSDF troops from Iraq: Public security remains an
open question
(2) Murder of mother and child: Supreme Court's call for capital
punishment is appropriate

Tokyo Shimbun:
(1) SDF withdrawal from Iraq: Every possible measure should be
taken until all troops return home
(2) BOJ Governor Fukui: Suspicions deepen

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, June 20

NIHON KEIZAI (Page 2) (Full)
June 21, 2006

09:01
Arrived at the Prime Minister's Office (Kantei)

09:33
Executive meeting at the LDP Headquarters

09:53
Cabinet meeting, followed by investment meeting, then conference
on measures to deal with low birth rate.

11:03
Party head discussion with New Komeito leader Kanzaki. LDP
Secretary General Takebe and New Komeito Secretary General

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Fuyushiba were present. Then liaison conference between the
government and the ruling coalition. Then met with Japanese
Communist Party Chairman Shii and Social Democratic Party Leader
Fukushima.

12:07

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Security meeting. Met with Iraqi Ambassador to Japan Al-Jumaily,
followed by Chief Cabinet Secretary Abe.

13:00
Press conference

14:01
Met with Miki Yoshida, chairman of the Okami Association of
Japanese Ryokan, followed by Upper House member Yoriko Kawaguchi.

15:00
Meeting of the Campaign Headquarters at LDP Headquarters. Took
photos with those who plan to run in next year's Upper House
election. Handed an endorsement certificate to a candidate for
the Lower House by-election for the Kanagawa No. 16 Constituency.

16:30
Met with Foreign Ministry Middle East and African Affairs Bureau
Director General Yoshikawa at the Kantei.

17:07
Cabinet meeting on measures to deal with crime and a joint
meeting of the Headquarters to Promote Measures to Nurture Young
People.

18:44
Met with chiefs of secretariat of various government agencies and
the Diet Liaison Office chief at Grand Arc Hanzomon Hotel.

19:02
Dined with LDP Policy Research Council Chairman and Acting
Chairman Nakagawa and Amari and others at a Chinese restaurant at
Kioicho.

20:54
Returned to the official residence.

4) Gist of Koizumi's press remarks

YOMIUIRI (Page 4) (Full)
June 21, 2006

The following is a gist of Prime Minister Koizumi's remarks in
yesterday's press conference:

Japan has consulted with the United States and other
multinational force members, including the United Kingdom and
Australia. As a result, I judged that the Ground Self-Defense
Force has now fulfilled its role to a certain extent through its
reconstruction assistance activities, and I therefore decided to
withdraw the GSDF unit. Japan will continue to help with Iraq's
nation rebuilding efforts, and I'd like to continue Japan's
assistance as far as possible while working together with various
countries and the United Nations.

This is not a matter of me wanting to or feeling the need to
withdraw the GSDF unit while I'm in office. I happened to make my
overall judgment at this point, and I'm pleased that I can
withdraw the GSDF unit. At this point, I'm not thinking of going
to Iraq, because I wouldn't want to burden other countries
unnecessarily with my security. I believe that the various steps
taken toward Iraq in compliance with United Nations resolutions

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were right. The international community has now overcome the
difference of opinions we faced when the war started. The
international community has agreed to carry out assistance
appropriate for each country. I'm aware of the Japan-US alliance
and its importance, and Japan will continue to work together with
the international community. I wouldn't say we need to create a
permanent law in the next Diet session (for Japan's future
overseas dispatch of Self-Defense Forces troops). But we must
discuss the matter.

5) ASDF to expand Iraq airlift missions next month

NIHON KEIZAI (Page 1) (Abridged)
June 21, 2006

The government has now decided to withdraw Ground Self-Defense
Force troops deployed in the southern Iraqi city of Samawah.
Based on the decision, the government began yesterday to prepare
for the Air Self-Defense Force to expand its airlift missions in
Iraq. The ASDF will expand the scope of its activities in July at
the earliest and support the US military and the United Nations
in order to airlift their supplies and personnel. In addition,
the ASDF will also send personnel to the multinational force's
headquarters in Baghdad to facilitate coordination.

The GSDF currently stations some personnel at the multinational
force's headquarters, but they will be replaced with ASDF
personnel along with the GSDF's pullout from Iraq. The ASDF
currently bases its airlift squadron in Kuwait, where about 200
ASDF members are deployed. The ASDF will reinforce the squadron
with about 10 more personnel.

ASDF transport planes have been on airlift missions from Kuwait
to Taril near Samawah. In July, the ASDF will extend its airlifts
to Baghdad and the northern Iraqi city of Arbil. In Baghdad,
however, aircraft could be targeted in terrorist attacks. The
government is therefore careful about the right timing.

Defense Agency Director General Fukushiro Nukaga ordered senior
officials in a meeting yesterday to fully consider the local
security situation. "Cargo transport is not something your rush
into; I want them to pay full attention to safety," Nukaga said.

6) Japan to provide Iraq with energy development assistance
centering on ODA after GSDF withdrawal, call for creation of
international assistance framework

YOMIURI (Page 2) (Full)
June 21, 2006

Following its decision yesterday to withdraw Ground Self-Defense
Forces (GSDF) troops from Iraq's southern city of Samawah, the
government made another decision to give reconstruction
assistance to that country as part of it official development
assistance (ODA). The focus of the aid will be on development
projects related to such energy resources as oil and natural gas.
The aim is to facilitate economic recovery in Iraq by advancing
the reconstruction of infrastructure relating to energy resources
that are abundant there. The government intends to call on the
international community to work together to create an
international framework for assistance to Iraq, although some
countries, such as France, which was opposed to US forces'

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attacks on Iraq, still remain unwilling to participate in
reconstruction assistance to Iraq.

Prime Minister Koizumi met with Iraqi Ambassador to Japan Al-
Jumaily at the Prime Minister's Official Residence at noon
yesterday and told the envoy: "We'll continue our assistance to
Iraq." The ambassador told Koizumi: "We have greatly appreciated
Japan's assistance it offered during a difficult time."

In October 2003, Japan announced it would provide Iraq with 5
billion dollars in assistance using the ODA program. Of that
amount, 1.5 billion dollars in grant aid have already been
targeted for specific use. Of the 3.5 billion dollars in yen
loans, approximately 2.8 billion dollars remain undecided as to
use.

In order to provide assistance to repair works at such facilities
as the oil factory in Basra in southern Iraq and oil or liquefied
natural gas (LNG)-related facilities in various other locations
in the country, coordination is underway. A senior Foreign
Ministry official commented: "Iraq is abundant in natural
resources. Development of oil or natural gas fields will directly
lead to foreign currency earnings and will become driving force
for the reconstruction of the country."

The government wants to be actively engaged in creating an
international assistance framework for Iraq. Foreign Minister Aso
yesterday afternoon held a teleconference with Iraqi Foreign
Minister Zebari. Zebari asked Aso, "A plan to create a new
international framework for assistance to Iraq is now afloat.
We'd like Japan to participate in that framework as an important
partner of our country." Aso indicated a positive stance, telling
Zebari: "We'd like to address the matter while basically
following that direction."

7) Abe positive about enacting permanent law for SDF missions
overseas and eliminating need for ad hoc legislation

ASAHI (Page 2) (Abridged)
June 21, 2006

The government has now decided to withdraw Ground Self-Defense
Force troops currently deployed to the southern Iraqi city of
Samawah. In this connection, Chief Cabinet Secretary Abe took a
positive stance in a press conference yesterday about creating a
permanent law that would allow the government to dispatch Self-
Defense Forces personnel overseas without need to pass a special
measures law each time. With the SDF's Iraq dispatch as the
chance, some in the government and ruling parties are calling for
permanent legislation to allow SDF participation in multinational
forces overseas. This will likely be a task for the post-Koizumi
government.

The ruling Liberal Democratic Party is already studying permanent
legislation, Abe said in the press conference. "It will be
possible to take flexible measures and make international
contributions," he added. One government official also suggested
the need for the next government to address the matter after all
Air Self-Defense Force personnel are back from their Iraq
mission.

"When it comes to a permanent law, there will be various

TOKYO 00003440 006 OF 011

problems," Prime Minister Koizumi said in a news conference
yesterday. "I'm not thinking of creating a permanent law while I
am in office," Koizumi added.

Meanwhile, Defense Agency Director General Nukaga yesterday
ordered the ASDF to reinforce its Kuwait-based squadron in order
to expand the scope of its airlift activities in Iraq. The ASDF
will send personnel to the multinational force's headquarters in
Baghdad to liaise. "We will meet the needs of the United Nations
and the United States," Nukaga said. The ASDF will continue to
airlift supplies and conduct humanitarian reconstruction
assistance activities, the defense chief said. The ASDF is
expected to expand the scope of its activities in Iraq within the
month after coordination with the United Nations.

8) Preparation for firing Taeopdong-2 missile underway; US taking
hard-line policy; Will discuss with Tokyo ways to strengthen
pressure on Pyongyang

YOMIURI (Page 7) (Excerpts)
June 21, 2006

North Korea is now preparing to launch a long-range ballistic
missile. The prevailing view among persons familiar with US-North
Korea relations here in Washington is that even if the North does
not actually test-fire a missile, the Bush administration's
policy toward that nation is certain to become even tougher.

Commenting on a possible missile launch, Secretary of State Rice
on June 19 told a press conference, "We are now considering the
next step." She thus revealed that Washington is now conferring
on measures to strengthen pressure on that nation. Pointing out
that the North has started preparations to launch a missile,
turning its back on the six-party talks, Rice hinted that there
is no chance of Washington making concessions in order to stop
Pyongyang from test-firing a missile.

There has been a clash of views in the Bush administration over
whether to give priority to dialogue or pressure. However, now
that Pyongyang is preparing to launch a missile, Deputy Assistant
Secretary of State Christopher Hill, who has aimed to settle the

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issue through diplomatic efforts, is bound to find himself in a
difficult situation.

9) Japan, US, Taiwan strengthen cooperation in security talks on
responding to China threat

SANKEI (Page 5) (Excerpt)
June 21, 2006

A symposium on the theme, "Security dialogue for peace and
stability in the Taiwan Strait," (convened by the Okazaki
Research Institute and sponsored by Sankei Shimbun) was held in
Tokyo on June 20 to discuss ways to deal with China, which is
rising economically and militarily. The participants, who
included lawmakers from Japan, the United States, and Taiwan,
former senior government officials, and former military brass,
carried on lively discussions. The symposium consisted of a
keynote speech and three sessions. In the keynote speech, former
ambassador to Thailand Hisahiko Okazaki pointed out the current
situation in the Taiwan Strait, where China is gradually gaining
the advantage, upsetting the military balance between it and

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Taiwan. He said there was a possibility in the future of China,
with the intention of bringing about its unification with Taiwan,
threatening it with armed force to create turmoil in the
political realm. In order to avoid such a crisis, he proposed the
need for creating a new consultative body between the US and
Taiwan for close discussions on the military issue.

10) Japan, US fail to reach agreement on US beef import
resumption; Further discussions to be held today

ASAHI (Page 1) (Full)
June 21, 2006

The governments of Japan and the US held a bureau director-level
teleconference yesterday evening in order for Japan to resume US
beef imports. During the talks, the Japanese delegation indicated
its intention to resume imports under certain conditions,
including allowing Japan to confirm the safety of US beef by
conducting prior inspections of US meat-processing plants.
However, no agreement was reached, so the two sides decided to
hold another round of talks this morning.

The teleconference started at 8:00 p.m. yesterday, with the
participation of Deputy Undersecretary of Agriculture Chuck
Lambert from the US side and bureau director generals and
councilors of the Foreign Ministry, the Ministry of Agriculture,
Forestry and Fisheries (MAFF) and the Ministry of Health, Labor
and Welfare (MHLW) from the Japanese side. As conditions for
reinstating the beef trade, the Japanese delegation asked the US
to approve the presence of Japanese officials at surprise
inspections of meatpackers conducted by the US side. The talks
continued until shortly after 12:00 am, but the two sides could
not reach agreement on items subject to prior inspections and
ways to facilitate such inspections.

The two sides will resume telephone talks at 9:00 this morning.
If they reach a consensus, experts dispatched by MOFA and MHLW
will carry out prior inspections of 35 US meatpackers. The
outlook is that US beef imports will start in late July, once it
is confirmed that the safety of products to be exported to Japan
is secured in compliance with the conditions agreed on between
the two countries.

11) US beef likely to be on shelves again in late July; Last-
minute negotiations going on

NIHON KEIZAI (Page 4) (Full)
June 21, 2006

Over the issue of resumption of US beef imports, the governments
of Japan and the United States held a teleconference between
senior officials from the Agriculture, Forestry, and Fisheries
Ministry (MAFF) and the US Agriculture Department last night. The
conference ended before dawn today and will be resumed this
morning to work out details. Both countries are expected to
agree, possibly today, to resume US beef trade on such conditions
as inspections of facilities certified to export beef to Japan
before Japan resumes imports. US beef is likely to be put on
store shelves in Japan again.

The Japanese government imposed a ban on US beef imports in
December 2003 following the discovery of the first case of BSE in

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the US. The ban was lifted last December but was reinstated this
January after vertebral columns, a specified risk material (SRM),
was discovered in a veal shipment to Japan.

Tokyo and Washington are expected to reach an official accord on
such conditions as prior inspections by Japanese government
officials of 35 meatpacking plants to check whether they have
complied with the requirements agreed on for the removal of the
import ban. In the teleconference yesterday, since details were
not worked out, both sides decided to continue discuss the
details today. The possibility is now strong that a settlement
will be reached on the pending issue of US beef imports prior to
the Japan-US summit set for next week.

Should no problem be found in the prior inspections, Japan will
reopen its market to US beef. About 1,000 tons of beef that
arrived in Japan just before the second ban in January but has
yet to clear customs has been stored in freezers or refrigerators
across the nation. The government plans to examine all of the
beef and then put it on store shelves.

Health, Labor, and Welfare Minister Jiro Kawasaki said yesterday
that officials "will inspect all beef imported from the US for
the time being." The government also intends to carry out snap
and regular inspections of US meatpacking facilities. But many
consumers are still skeptical of the reliability of the United
States' safety-management system, keeping in mind the fact that
prohibited materials were also found in beef shipments to Hong
Kong and Taiwan. South Korea has put off its planned resumption
of US beef imports after defects were found in its prior
inspections into US facilities. MAFF Minister Shoichi Nakagawa
said that if some flaws are found in inspections, Japan would
also discuss the issue (with the US) again."

12) Yoshinoya willing to put beef bowl on menu possibly in
September, but most restaurant chains, distributors remain
cautious

NIHON KEIZAI (Page 4) (Full)
June 21, 2006

The governments of Japan and the United States are expected to
reach an agreement on the resumption of US beef trade. Following
this development, some gyudon (beef bowl) and beef barbecue
restaurant operators will soon start preparations to buy US beef.
Yoshinoya D&C Co. will put gyudon on its menu in late September
at the earliest. However, consumers have been skeptical of the
safety of US beef in the wake of the discovery of specified risk
materials considered to be a BSE risk in a veal shipment to Japan
in January. Given this, most retailers and restaurant chains are
cautious about using US beef.

Japan Food Service Association Chairman Kazuhide Maihama said
yesterday:

"We welcome the growing possibility that US beef imports will be
resumed soon. Many restaurant operators, including beef barbeque
and tongue restaurants, have received a serious blow. I hope
imports will be resumed as soon as possible. I expect the
government to give an explanation to consumers and operators in a
proper way."

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Under the agreed conditions, shipments are limited to beef from
cattle aged 20 months or younger, so Yoshinoya expects only 1,000
tons of meat will be available per month, which is equivalent to
40% of the volume recorded before the initial import ban was
imposed in December 2003. It plans to offer the dish only for
limited hours, like lunchtime.

Although its rivals have used Chinese or Australian beef,
Yoshinoya has kept its policy of using only American beef and has
stopped serving gyudon. As a member of its planning office said:
"In the case of US beef, it is possible to procure a large volume
of parts that we need and those with plenty of fat on them, which
Japanese love," the company believes that American beef is most
suitable for gyudon.

Yorkbenimaru Co., a supermarket chain based in Tohoku, also
highlighted this point and is eager to resume the sale of US
beef.

However, many retailers and restaurant operators remain cautious
about buying in American beef.

Ito-Yokado Co. has decided not to sell US beef for the time
being, with a spokesperson saying: "It seems difficult to obtain
understanding from customers." Aeon Corp. intends to watch the
situation for a while, a staff member saying: "While giving
priority to a sense of safety, we will decide whether to put the
product on our shelves."

13) Consumer opposition steamrolled in decision to resume imports
of US beef; Government maintains it is "carefully following
procedures"

MAINICHI (Page 2) (Excerpts)
June 21, 2006

The expected agreement between Japan and the United States to
resume imports of US beef comes in the form of steamrollering the
deep-seated opposition of Japanese consumers. Although the
government has concluded that it has fully followed procedures to
reach a final decision, the resumption of imports is likely to
leave most Japanese not quite satisfied.

"I cannot at all sense that you have consumers' understanding,"
said one individual of an open hearing held by the government on
June 14 to exchange views. Similar cautious views came one after
the other. However, in the government's view, the issue was
settled last year when the Food Safety Commission discussed the
overall safety of US beef and made its risk evaluation.

The judgment criteria for restarting US beef shipments center
around whether the following two import conditions set by Japan
can be kept: 1) limiting selection to cows under the age of 20
months; and 2) removing specified risk materials. The government
will do no more than listen to any view that goes beyond that
framework. Although prior inspections and surprise inspections
have been accepted, the consumers continue to insist, "The US
cannot be trusted." One can say that the discussions between the
consumers and Japanese government were at cross purposes to the
end.

14) Abe to announce his candidacy for LDP presidency in late

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August, ascertaining moves of other possible candidates

NIHON KEIZAI (Page 2) (Full)
June 21, 2006

Chief Cabinet Secretary Shinzo Abe yesterday began coordination
to put off announcing his candidacy for the September Liberal
Democratic Party (LDP) presidential election until late August.
He revealed that he would announce his candidacy probably after
the mid-August G-8 summit in St. Petersburg, Russia. Based on the
fact that he leads various opinion polls among the possible
presidential candidates, he intends to carefully ascertain the
moves of other contenders. He plans to publish a book containing
his policy proposals in late July. He then aims to obtain cross-
factional support.

In late May, Abe essentially announced his candidacy for the LDP
leadership race. He has at present an advantage over other
candidates. An aide to Abe explained his strategy: "Putting off
the announcement of his candidacy until last moment, he will make
his move all at once." Abe intends to prioritize policy debate
that is visible to the public rather than the hard work of
gathering supporters after an early announcement of his
candidacy.

In the book to be published, he will introduce his comprehensive
visions and policies for security, the economy, and education. He
is expected to focus on such issues as constitutional revision,
strengthening the Japan-US alliance, and respect for tradition
and culture, which will be his main campaign pledges for the
upcoming LDP presidential election. He will prepare for policy
debate, making clear his own political identity in the policy
front.

15) Ruling coalition concerned about backlash against BOJ
governor; opposition to strengthen calls for resignation

NIHON KEIZAI (Page 2) (Full)
June 21, 2006

Learning yesterday that Bank of Japan Gov. Toshihiko Fukui's 10
million yen investment in the Murakami Fund had grown to 22
million yen as of the end of last year, the ruling and opposition
camps are now stepping up criticism of him. No one from the
government or ruling coalition has questioned his actions, but
member after member expressed concern about a backlash from the
public.

Toranosuke Katayama, secretary general of the LDP caucus in the
House of Councillors, pointed out: "I think ordinary people feel
something is wrong. His conduct is not illegal, but he made a lot
of money." Koichi Kato also made a critical comment: "It is only
natural that average people envy him. I have to say that he was
careless."

House of Representatives member Keiichi Ishii of the New Komeito
asked, "I wonder why he continued to hold the investment when he
assumed the post of BOJ governor?"

Ichiro Ozawa, president of the largest opposition party Minshuto
(Democratic Party of Japan), stressed: "As the governor of the
Bank of Japan, his conduct is dishonorable and questionable. He

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should think seriously about his conduct in light of his
position."

Opposition parties intend to step up their pursuit of Fukui in a
closed-door session on June 22 of the Lower House Financial
Affairs Committee during the Diet recess, calling for his
resignation.

16) Minshuto will not punish lawmaker Matsui

NIHON KEIZAI (Page 2) (Excerpts)
June 21, 2006

House of Representatives member Koji Matsui of Minshuto
(Democratic Party of Japan) said yesterday that a company
affiliated with the Murakami Fund had paid the salaries of his
secretaries. However, the main opposition party yesterday decided

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not to punish Matsui. Party head Ichiro Ozawa stated in a press
conference: "Sincerely explaining the facts, he has reflected on
his conduct and is determined to fulfill his duty. The party has
no intention to punish him." He indicated that Matsui has
fulfilled his accountability.

Matsui, at a press briefing yesterday in Kyoto, said that the
company temporarily paid the salaries of two secretaries of his
and that he would report a total of 1, 533,900 yen that the two
secretaries had received to the government, based on the

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Political Fund Control Law.

SCHIEFFER

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