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Cablegate: Japanese Morning Press Highlights 08/01/06

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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 08/01/06


Index:

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

4) FNN poll shows Koizumi Cabinet support at 43.2%, Abe still in the
far lead in the LDP presidential race

5) Iran resolution in the UNSC will impact on Japan's resource
strategy since 14% of its crude comes from that country

North Korea problem:
6) LDP team working on new tougher bill on North Korea that would
block its money-laundering schemes
7) Confirmed that North Korea has invited LDP's Taku Yamasaki to
visit Pyongyang

Defense issues:
8) JDA announces ASDF aircraft have started transporting goods from
Kuwait to Baghdad as part of expanded assistance to Iraq
9) DFAA official gets one and half years in the slammer for
big-rigging

Yasukuni issue:
10) Emperor's words of displeasure about Class-A war criminals at
Yasukuni Shrine continue to reverberate in political world
11) In a first such case, bereaved family of Taiwanese killed in
WWII sues Yasukuni to remove name from list of enshrined war dead

Political agenda:
12) Koizumi's "graduation trip": one week stumping for Abe in
Yamaguchi; one week traveling in Mongolia
13) Chief Cabinet Secretary Abe wants to create US-model
press-spokesman system in Kantei
14) Abe in election campaign dodges tough questions on tax rate
increase and timing of such
15) Abe strengthening ties to the business worlds as election
campaign begins

16) Vice agricultural minister eager to expand country-of-origin
labeling on beef to include processed food

17) Regulatory reform interim report slammed, ignored by bureaucracy


Articles:

1) TOP HEADLINES

Asahi:
Matsushita Electric Industrial affiliate found to have loaned a
large number of employees to contractor; Effort to avoid illegality?
Labor Bureau to investigate situation shortly

Mainichi, Yomiuri, Sankei & Tokyo Shimbun:
Girl dies after being sucked into pool drain

Nihon Keizai:
Mortgage rates rising moderately after end to zero-rate policy

Akahata:

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JCP Chairman Shii calls for national solidarity to halt US force
realignment during speech in Iwakuni City

2) EDITORIALS

Asahi:
(1) Lebanon crisis: Halt to air-raids insufficient
(2) Women's sports: High barrier to clear for women to actively take
part in sports

Mainichi:
(1) Israel should listen to criticism from the rest of the world
(2) Biofuel: Order needed for production and use

Yomiuri:
(1) Postal privatization: Something more important than business
expansion
(2) Lebanon: Breakthrough in crisis with halt to air bombing

Nihon Keizai:
2006 LDP presidential election -- policy agenda: A grand vision
should be shown for financial reconstruction

Sankei:
(1) Postal business projects: What happened to the idea of
downsizing Japan Post?
(2) Lebanon: Self-restraint and patience required of both parties

Tokyo Shimbun:
(1) Lebanon tragedy: UN should lead move for cease-fire
(2) Promotion of decentralization of authority necessary

Akahata:
Change for the worse in medical system: Higher co-payments for the
elderly should be cancelled

3) Prime Minister's Official Residence (Kantei)

Prime Minister's schedule, July 31

NIHON KEIZAI (Page 2) (Full)
August 1, 2006

10:46
Met at Kantei with Foreign Minister Aso and MOFA Foreign Policy
Bureau chief Kono.

11:07
Met Aso, Economy, Trade, and Industry Minister Nikai, Agriculture
Minister Special Assistant Murakami, Finance Ministry Customs and
Tariff Bureau chief Aoyama, and others.

14:10
Met former Ambassador to Thailand Hisahiko Okazaki, followed by
Deputy Chief Cabinet Secretary Futahashi.

15:29
Met Futahashi.

16:30
Met Chief Cabinet Secretary Abe.


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18:27
Had a haircut at the barbershop in the Capitol Tokyu Hotel.

20:50
Returned to his residence.

4) Poll: Abe keeps advantage in LDP race

SANKEI (Page 1) (Full)
August 1, 2006

With the ruling Liberal Democratic Party's post-Koizumi presidential
election scheduled for this September, Chief Cabinet Secretary
Shinzo Abe, 51, maintained his advantage over all other potential
candidates in a public opinion survey conducted July 29-30 by Fuji
News Network (FNN). In the poll, Abe stood at 45.6%. Among LDP
supporters, his popularity reached 67.9%. In addition, more than 60%
called for the Japanese government to intensify its measures against
North Korea for its recent firing of missiles. This appears to have
led to the rising popularity of Abe as a hardliner toward North
Korea.

Abe ranked first, up 1.2%age points from the last survey conducted
July 1-2. Former Chief Cabinet Secretary Yasuo Fukuda, 70, has now
clarified that he would not run in the LDP race. In his stead,
Finance Minister Sadakazu Tanigaki, 61, ranked second at 9.3% with
his candidacy recently announced, up 7.2 points from the last poll.

Among other candidates, Fukuda garnered 9.0%, followed by Foreign
Minister Taro Aso, 65, standing at 5.6%, and Senior Vice Justice
Minister Kono, 43, at 1.3%. Former LDP Vice President Taku Yamasaki,
69, now rumored to run, was at 0.6%. Defense Agency Director General
Fukushiro Nukaga, 62, leveled off at 0.2%.

Among LDP supporters, Abe ranked 12-13 times higher than Tanigaki
(5.7% ) and Aso (5.1% ).

Abe, if he keeps his current popularity rating, will head the LDP
and will likely have a showdown with Ichiro Ozawa, 64, president of
the leading opposition Democratic Party of Japan (Minshuto), in the
House of Councillors election scheduled for the summer of next year.
In the survey, however, respondents were asked which one they
thought would be appropriate as the next prime minister, with Abe
reaching 58.1% and Ozawa at 25.7%.

Asked about North Korea's recent missile launches, 63.4% urged the
Japanese government to intensify its countermeasures against North
Korea.

In the meantime, the Ground Self-Defense Force has completed its
two-and-a-half-year mission in Iraq. Asked about this, 58.8% gave
high marks to the GSDF, with 30.4% negative. The approval rating for
the Koizumi cabinet was 43.2%, slightly up from the 42.5% rating in
the last survey.

5) UNSC adopts resolution on Iran, but sanctions a ways off;
Possible impact on Japan's resource strategy due to its dependence
on Iran for 14% crude oil imports

NIHON KEIZAI (Page 7) (Excerpts)
August 1, 2006


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The United Nations Security Council (UNSC) has adopted a resolution
on Iran. This is likely to put the Japanese government in an even
more difficult situation in terms of diplomatic ties with Iran.
Japan, which depends on Iran for 14% of its crude oil imports, is
looking for ways to maintain a friendly relationship with that
country, but the United States, which continues to take a hard line
on Iran and aims to impose sanctions on it, seems to be putting
pressure behind the scenes on Japan. Negotiations with Tehran on the
development of the Azadegan oil field in southwest Iran are expected
to be difficult. Japan will be inevitably forced to reconsider its
energy resource strategy.

Japan acquired the preferential negotiating rights on the
development of the Azadegan oil field in 2000. A joint venture
consisting of Inpex Corporation and other companies are advancing
development plans. The estimated amount of crude oil there is 26
billion barrels, making it the largest in Iran. The production
volume is expected to be 300,000-400,000 barrels per day, which is
approximately 10% of Japan's total crude oil imports. The
development is planned to start this fall, but some in the US
government have been opposed to Japan's participation.

As for the true intent of the US government, some in Japan take an
optimistic view. For example, a government official says, "No formal
objection has come from the US." An oil industry official notes,
"It's not America's desire that China, which is trying to take the
place of Japan, approach Iran." But if Iran does not respond to the
UNSC resolution, the US will likely toughen its stance.

In such a case, a senior Foreign Ministry official says, the
Japanese government's position is "to prioritize relations with the
US and international cooperation." A senior official of the Ministry
of Economy, Trade, and Industry says: "We have also taken into
consideration giving up on the plan for the development of the
Azadegan oil field." Even if Japan abandoned the oil rights, Iran
would still remain the third largest oil supplier for Japan. While
the international community is putting pressure on Iran, Japan will
be forced to make a difficult diplomatic decision, facing a dilemma
of its own energy strategy and international cooperation.

6) LDP eyes additional legislation for financial sanctions on North
Korea

YOMIURI (Page 2) (Abridged)
August 1, 2006

The ruling Liberal Democratic Party, now considering additional
sanctions on North Korea in response to its recent firing of
missiles, held a meeting of its project team yesterday to simulate
economic sanctions against North Korea. In the meeting, the project
team, chaired by Ichita Yamamoto, a member of the House of
Councillors, outlined a legislative measure seeking to create a
financial sanctions law that can order banking institutions to stop
their transactions with banks suspected of being used by North Korea
and other countries for moneylaundering purposes. The LDP will
present the bill to the Diet in this fall's extraordinary session.

The outlined bill says the government will specify banks and other
commercial banking institutions suspected of being involved in
moneylaundering and will prohibit domestic banking institutions from
conducting transactions with these banks. The bill is targeted at
moneylaundering, with North Korea-affiliated banking institutions in

TOKYO 00004275 005 OF 010


mind. The planned law makes it possible for the government to invoke
sanctions under requirements that are more moderate than under the
Foreign Exchange and Foreign Trade Control Law.

The financial sanctions legislation is also intended to pressure
North Korea even more strongly with new sanction measures in
addition to actions under the forex law, according to an LDP source.
"It's difficult to discover moneylaundering practices, so we can
expect the planned law to prevent such practices from involving
Japanese banks," Yamamoto said yesterday.

7) North Korea found to have asked former LDP Vice President
Yamasaki to visit Pyongyang

YOMIURI (Page 4) (Full)
August 1, 2006

North Korea had asked former Liberal Democratic Party (LDP) Vice
President Yamasaki to visit that country, several sources revealed.
According to them, when Yamasaki visited the United States late
July, he met with a senior Washington Times journalist and received
an invitation by North Korea to visit that country. Yamasaki denied
this story. Some in the government are conjecturing that North Korea
is trying to improve relations with Japan and the US via Yamasaki.

8) ASDF expands mission in Iraq

YOMIURI (Page 2) (Full)
August 1, 2006

The Air Self-Defense Force yesterday flew its C-130 transport to
Baghdad Airport for the first time, the Defense Agency said
yesterday. The ASDF has been engaged in airlift services for an
Iraq-based multinational force under an Iraq reconstruction
assistance special measures law. The C-130 flight to Baghdad became
the first of expanded ASDF activities following the withdrawal of
Ground Self-Defense Force troops from Iraq.

The ASDF, currently basing its transports at Ali Al Salem Air Base
in Kuwait, has conducted airlift services to Taril near the southern
Iraqi city of Samawah, where the GSDF deployed troops, and also to
Basra for the GSDF and the multinational force. There are now less
needs for airlifts to Taril with the GSDF's pullout, so the Defense
Agency has decided to extend the ASDF's flight mission to Baghdad
and the northern Iraqi city of Arbil. The C-130 flight to Baghdad
yesterday was for the multinational force.

"The Iraqi government and the multinational force are maintaining
local security, so there are no problems about safety," a senior
official of the Defense Agency said.

9) Tokyo District Court sentences Ikezawa to prison term over
bid-rigging case involving DFAA

SANKEI (Page 27) (Excerpts)
August 1, 2006

In connection with a bureaucrat-initiated bid-rigging case involving
the Defense Facilities Administration Agency, the Tokyo District
Court sentenced yesterday former technical councilor Mamoru Ikezawa,
57, to 18 months in prison (prosecutors demanded 2 years); former
technical councilor Takayoshi Kawano, 58, and former General Affairs

TOKYO 00004275 006 OF 010


Department facilities inspector Takashige Matsuda, 53, to 18 months
in prison, suspended for three years (prosecutors demanded two years
for Kawano and 18 months for Matsuda). Presiding judge Tsutomu
Aoyagi criticized them: "You continued engaging in the illicit
bureaucrat-initiated bid-rigging practice to secure postretirement
jobs with contractors in defiance of your mission as civil servants.
Your behavior of trampling on public trust is unacceptable."

10) Asahi Newstar: Comments by party leaders on emperor's memo

ASAHI (Page 4) (Full)
August 1, 2006

The revelation of a memorandum showing Emperor Showa's (Horopito)
displeasure with the enshrinement of Class-A war criminals at
Yasukuni Shrine is continuing creating a stir. The subject is also
affecting debate on Yasukuni Shrine in Nagatacho.

Social Democratic Party head Mizuho Fukushima said:

"It is not good to place too much emphasis on how Emperor Showa
felt, but the memo confirmed that the emperor thought that the
enshrinement of Class-A war criminals at Yasukuni was improper. How
should we take that war and how should we perceive history? We must
perceive them as domestic issues before being told by other
countries."

Minshuto (Democratic Party of Japan) Secretary General Yukio
Hatoyama noted:

"Japanese people, including myself, lack a knowledge of the history
of the Showa era. The memo has provided us with an opportunity to
restudy history. It will have an adverse effect on the prime
minister's visits to Yasukuni Shrine. Still, Prime Minister Koizumi
will probably visit the shrine on August 15."

LDP Acting Secretary-General Ichiro Aisawa took this view:

"Emperor Showa's feeling must be taken seriously. The postwar
generation regrets that we have not faced up to Japan's history that
led to destruction. It is important to restudy history to voice our
own views."

The emperor's memo has posed serious questions: How should that war
be perceived and how should we face history?

11) A group of families of war dead, including a Taiwanese, to sue
Yasukuni Shrine demanding unenshrinement

SANKEI (Page 27) (Excerpts)
August 1, 2006

A group of bereaved families of the war dead, including a Taiwanese
man who was recruited by the Imperial Japanese Army during World War
II, will file a lawsuit on August 11 with the Osaka District Court
against Yasukuni Shrine demanding unenshrinement on the grounds that
the enshrinement of the spirits of the war dead at the shrine
without the bereaved families' consent infringed on the families'
human rights. It will become the first lawsuit against Yasukuni
Shrine demanding unenshrinement.

A group of bereaved families of former Korean soldiers and civilian

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employees sued the government demanding the war dead be removed from
Yasukuni Shrine claiming that the government had been involved in
procedures for enshrining them at the Shinto shrine. But The Tokyo
District Court rejected the plaintiffs' claim in May, saying:
"Collective enshrinement at Yasukuni Shrine was decided
independently by the shrine, and the government did not act as one
with the shrine." The bereaved families will file the lawsuit
against the shrine based on this ruling.

12) Prime Minister Koizumi's graduation trip in August; He will
visit Yamaguchi Prefecture to give encouragement to Abe in the first
week, To make a trip to Mongolia in the second week

MAINICHI (Page 5) (Full)
August 1, 2006

Prime Minister Junichiro Koizumi will visit on August 4-5 Yamaguchi
Prefecture to tour Shoka Sonjuku where Yoshida Shoin, a scholar in
the last days of the Tokugawa shogunate, taught the youth military
arts and politics. Yamaguchi is the hometown of Chief Cabinet
Secretary Shinzo Abe, who is regarded as the strongest candidate in

SIPDIS
the presidential election of the Liberal Democratic Party (LDP) in
September. Many observers think that the Koizumi's planned visit to
Yamaguchi is intended to give encouragements to Abe.

Koizumi thinks highly of Shoin. He said yesterday to reporters, "I
wanted to visit there once." He will stop on Aug. 4 in the city of
Shimonoseki, where Abe comes from, on his way to Hiroshima where he
will attend a peace memorial on Aug. 6.

Abe announced yesterday that Koizumi would visit Mongolia on Aug.
10-11. The prime minister is expected to meet with his Mongolian
counterpart Miegombyn Enkhbold to offer his congratulations on the
800th anniversary day. The two leaders will discuss measures to
strengthen bilateral relations.

13) Chief Cabinet Secretary Abe considering expanding authority of
cabinet public relations secretary on par with US; New secretary
required to have strategy; Could be recruited from private sector

MAINICHI (Page 2) (Full)
August 1, 2006

Chief Cabinet Secretary Shinzo Abe yesterday began looking into the
possibility of expanding the authority of the cabinet public
relations secretary, a vice-ministerial level post. He indicated a
positive stance toward recruiting a private citizen. This post is
currently vacant. The plan could become the highlight of personnel
changes to be made by the next administration. Abe appears to have
the image of the US presidential spokesman, who holds press
conferences, while taking part in the strategic development process
of the administration. The challenge will likely be how to sort out
role sharing between a cabinet public relations secretary with
expanded authority and the chief cabinet secretary, a spokesman for
the cabinet.

A cabinet public relations secretary is a special post for a
political appointee. It is possible to fill this post with a private
citizen. However, since the post was established in 2001, two
persons have held it, both bureaucrats from the former Construction
Ministry. It currently remains vacant since former secretary
Shunichi Maeda was appointed Cabinet Office vice minister on July

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28. Asked about the reasons for that, Abe on the 21st told
reporters, "Since the cabinet public relations secretary is in a
position of doing his job in close communication with the prime
minister and the chief cabinet secretary, the post will not be
filled until the next cabinet is launched."

The previous two cabinet public relations secretaries were
responsible for preparing news conferences by the prime minister and
the chief cabinet secretary. However, an aide close to Abe
underscored: "The US presidential spokesman maps out strategies to
maintain the administration's public support ratings. He also holds
his own press conferences. We need a secretary with a strategy in
the run-up to the Upper House election next year." Under the Diet
Law, lawmakers are unable to hold the additional post of cabinet
public relations secretary, so the government must select an
appropriate person, who can be a private citizen.

14) LDP presidential race: Abe fails to show tax hike rate and
timeframe for an increase; Tanigaki pledges to raise consumption tax
to 10% for social security spending

NIHON KEIZAI (Page 2) (Excerpts)
August 1, 2006

The gap on the question of whether to raise the consumption tax has
become clear among hopefuls for the September Liberal Democratic
Party (LDP) presidential election. The tax hike issue will become a
campaign issue for the presidential race. Finance Minister Sadakazu
Tanigaki has pledged that if he becomes the next prime minister, he
will increase the consumption tax to 10%. Chief Cabinet Secretary
Shinzo Abe, however, categorically said in a press conference
yesterday that it was not appropriate to reveal a specific tax rate
and a time for reviewing the consumption tax rate. Therefore,
presidential candidates will likely focus on a debate on which
priority should be placed financial reconstruction or economic
growth.

Asked about his view on whether to raise the consumption tax at the
press meeting yesterday, Abe clarified that he would not put forward
a concrete proposal during the presidential campaign, responding:

"I will make efforts to reduce the expenditures and push ahead with
the sale of national properties, (not to hike the consumption tax
first). It is also of importance to try to increase economic growth
and natural growth of tax revenue."

Abe also said, "I think it's too early" to carry out a full debate
on the consumption tax at the end of the year as part of a review of
the tax rates for next fiscal year. Asked about his view on
Tanigaki's proposal for using tax revenues for social security
spending, he responded:

"There is a view that the fiscal condition would get rigid if tax
revenues are used for certain purposes. I think it is not an issue
that should be discussed without obtaining public understanding."

15) Abe strengthening solidarity with business circles

NIHON KEIZAI (Page 2) (Excerpts)
August 1, 2006

Chief Cabinet Secretary Shinzo Abe, who is regarded as the

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front-runner in the upcoming Liberal Democratic Party presidential
election, is now strengthening solidarity with business circles. He
met yesterday with Japan Business Federation (Keidanren) Chairman
Fujio Miterai to ask for the JBF's cooperation to support failed
entrepreneurs to enter the market again. He is expected to meet on
Aug. 5 with Kansai Business Federation leaders. Since business
circles have placed importance to building communication channels to
the Prime Minister's Official Residence, Abe and business leaders
share the view that the good relations that have been maintained
under the Koizumi government should be continued.

"I will try to create a society in which everybody can have a second
chance. If society is revitalized by utilizing the untapped source
of talent, it will be good for Japanese economic growth," said Abe.
Miterai then responded, "I have the same view." The two agreed to
hold regular meetings.

16) Beef: Vice agriculture minister favors expanding products
subject to country-of-origin labeling requirement

YOMIURI (Page 9) (Full)
August 1, 2006

Vice Agriculture, Forestry, and Fisheries Minister Mamoru Ishihara
during yesterday's news conference revealed his ministry's intention
to consider the possibility of expanding items subject to a
country-of-origin labeling requirement. Commenting on the
possibility of expanding target items to cooked products, such as
hamburgers, Ishihara indicated a positive stance: "Such an opinion
was heard during town meetings with consumers. We would like to look
into the matter from various perspectives."

Quality labeling guidelines for processed food set under the Japan
Agricultural Standards (JAS) Law are expected to be revised. New
guidelines will require country-of-origin labeling for processed
food that is close to fresh food, such as basted beef, as well as
fresh meat starting in October. However, cooked food, such as
hamburger steaks, and frozen food will not be subject to this
requirement.

Regarding the US request for easing import conditions from beef from
cattle aged up to 20 to that from cattle aged up to 30 months,
Ishihara warned: "Such a request will raise skepticism among
consumers. Nothing good will come of it."

17) Interim report on regulatory reform urges early start of
discussions; Coordination of views bound to encounter complications
due to opposition from government agencies

YOMIURI (Page 2) (Full)
August 1, 2006

The government's Regulatory Reform and Privatization Promotion
Council (chaired by Yoshihiko Miyauchi, chairman of Orix) yesterday
afternoon submitted to Prime Minister Junichiro Koizumi an interim
report on six key reform items, including broadcasting,
communications, child-raising, and foreigners. The panel will aim at
mapping out a final report - due in December - close to the interim
report. However, coordination will likely face complications, with
many government agencies opposing the proposals included in the
report.


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The panel was launched in April 2004, and this year is the final
year of the three-year program. It is unusual for a panel to map out
an interim report. Miyauchi during yesterday's press conference
said, "We have included the reform items that had to be in there."

"The interim report that covered six fields was mapped out with the
aim of identifying areas where the progress of reform is slow and
promoting discussions in order to produce results before the end of
the year," a spokesman for the panel explained. The panel also wants
to win concessions from government agencies by fully using the
influence of Koizumi before he steps down in September.

SCHIEFFER

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