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Cablegate: Daily Summary of Japanese Press 10/12/06

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PP RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #5929/01 2850745
ZNR UUUUU ZZH
P 120745Z OCT 06
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC PRIORITY 7349
INFO RUEKJCS/SECDEF WASHDC PRIORITY
RHEHAAA/THE WHITE HOUSE WASHINGTON DC PRIORITY
RUEAWJA/USDOJ WASHDC PRIORITY
RULSDMK/USDOT WASHDC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RUEKJCS/JOINT STAFF WASHDC//J5//
RHHMUNA/HQ USPACOM HONOLULU HI
RHHMHBA/COMPACFLT PEARL HARBOR HI
RHMFIUU/HQ PACAF HICKAM AFB HI//CC/PA//
RHMFIUU/COMUSJAPAN YOKOTA AB JA//J5/JO21//
RUYNAAC/COMNAVFORJAPAN YOKOSUKA JA
RUAYJAA/COMPATWING ONE KAMI SEYA JA
RUEHNH/AMCONSUL NAHA 0960
RUEHFK/AMCONSUL FUKUOKA 8421
RUEHOK/AMCONSUL OSAKA KOBE 1796
RUEHNAG/AMCONSUL NAGOYA 8124
RUEHKSO/AMCONSUL SAPPORO 9495
RUEHBJ/AMEMBASSY BEIJING 4526
RUEHUL/AMEMBASSY SEOUL 0644
RUCNDT/USMISSION USUN NEW YORK 2231

UNCLAS SECTION 01 OF 10 TOKYO 005929

SIPDIS

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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: DAILY SUMMARY OF JAPANESE PRESS 10/12/06

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INDEX:

(1) How will Japan respond to maritime interdictions?

(2) Shock waves of North Korea's nuclear test (Part 1): US weak spot
hit -- "double standard" of looking kindly at "nuclear club," such
as India, Pakistan

(3) Shock waves from North Korea's nuclear test (Part 2): Bush
administration under fire even in nation over hard-line stance

(4) New prime ministerial secretaries enjoy deep confidence of Abe

(5) Japan, China agree on closer cooperation in energy saving,
environmental protection

(6) Trend away from bid-rigging part 3: Surcharge leniency system is
bringing about self-cleansing

(7) JCP chief, other opposition leaders determined to win Okinawa
election, stop new base

ARTICLES:

(1) How will Japan respond to maritime interdictions?

SANKEI (Page 2) (Full)
October 11, 2006

In the wake of North Korea's recent proclamation of its nuclear
test, Japan's response over the advisability of inspecting ships to
and from North Korea is now being floated as an issue at point. That
is because the United States is insisting on the necessity of
maritime intercept operations (MIO) in order to impose sanctions on
North Korea. However, Japan is shackled with its legal constraints.
The government therefore deems it difficult for Japan to take part
in such maritime interdictions. Meanwhile, North Korea is presumably
in a hurry to miniaturize nuclear warheads. Given such a situation,
there is no time to lose in shielding Japan with a missile defense
(MD) system.

"There's no choice but to take action within the bounds of our
country's laws, but the government has taken steps to control the
flow of goods and money." With this, Prime Minister Shinzo Abe,
sitting yesterday on the House of Representatives Budget Committee,
indicated that it would be difficult for Japan to raid and search
North Korean ships.

The Ship Inspection Operations Law-which stipulates legal grounds
for Japan to inspect foreign vessels on the high seas-allows Japan
to inspect ships on the high seas if and when the government
recognizes a contingency in the neighborhood of Japan. In that
event, the Maritime Self-Defense Force is allowed under the law to
inspect ships in international waters near North Korea and back up
US naval vessels inspecting ships at sea.

The law provides that Japan may inspect foreign vessels at sea with
consent obtained from the United Nations Security Council or
otherwise from the governments of their countries. The United States
has shown to the UNSC members its draft of a sanctions resolution,
including inspecting all vessels to and from North Korea. If the
UNSC adopts this draft resolution, the United States will likely ask
Japan to carry out ship inspections.

TOKYO 00005929 002 OF 010

Even if North Korea's nuclear test is acknowledged as a contingency
in the periphery of Japan, the government will have to make a
cabinet decision on a masterplan incorporating ship inspection,
rear-echelon support, and other measures.

In point of fact, however, "situations in areas surrounding Japan
are supposed to be synonymous with conflicts on the Korean
Peninsula," a Foreign Ministry source notes. "It's considerably
risky to recognize an underground nuclear test as a contingency in
the neighborhood of Japan," another government source also says.
"Japan is not thinking of going so far as to carry out maritime
interdictions," Foreign Minister Taro Aso stressed in his recent
press remarks. His remarks were in line with these views.

If the UNSC adopted the US draft of a sanctions resolution, and if
the United States asked Japan for cooperation, Tokyo would like to
obtain Washington's understanding by explaining Japan's
circumstances and invoking sanctions other than maritime
interdictions. From the start, the legal term "situations in areas
surrounding Japan" is defined as "situations that will have an
important influence on Japan's peace and security." This definition,
however, is vague in its meaning and makes the government's
decision-making difficult.

If North Korea was really successful in its nuclear test, that is
truly a matter of life or death for Japan. For the rest, North Korea
has only to miniaturize its nuclear bombs and payload its ballistic
missiles with miniaturized nuclear bombs to complete nuclear
missiles.

There is no guarantee that North Korea will not use nuclear bombs.
Suppose Japan comes under attack from North Korea with its
nuclear-warheaded Rodong missiles. Such a worst-case scenario is no
longer a fiction.

"Generally speaking, we need considerably high technologies to
miniaturize a nuclear bomb and load a missile with that bomb as a
warhead. We've yet to find out that they have established such
technologies." With this, Defense Agency Director General Fumio
Kyuma indicated before the House of Representatives Budget Committee
in its meeting yesterday that it would still take North Korea some
time to develop weapons-grade nuclear bombs. However, he also
expressed alarm, saying, "We must remain careful."

Is there any means for Japan to defend itself against nuclear
missiles? "As of today, Japan can do nothing on its own," a senior
official of the Defense Agency said deprecatingly.

One conceivable countermeasure against ballistic missiles is to
build an MD system. The Defense Agency plans to deploy Patriot
Advanced Capability 3 (PAC-3) missiles to the Air Self-Defense
Force's Iruma base in Saitama Prefecture by March next year.

Japan will defend its metropolitan area with the deployment of this
intercept missile system as Japan's first ever antimissile system.
"The defensive range of a PAC-3 battery covers a radius of several
dozen kilometers," says an ASDF officer. This officer added, "If we
deploy two PAC-3 batteries on the outskirts of Tokyo, it's well
possible to defend Tokyo's 23 wards." The US military is also
beginning to deploy PAC-3 batteries to its Kadena airbase in Okinawa
Prefecture, and they will go operational within the year.


TOKYO 00005929 003 OF 010


The USS Shiloh, an Aegis-equipped cruiser of the US Navy, is loaded
with the Standard Missile 3 (SM-3) as a sea-based MD system. In late
August, the cruiser arrived at Yokosuka for deployment. The MSDF is
also planning to mount SM-3 missiles on its Aegis destroyers by the
end of next fiscal year.

US Forces Japan and the Self-Defense Forces have role-sharing
scenarios for their bilateral defense planning in anticipation of
North Korea's missile launches, according to a senior official of
the Defense Agency. It is critical to ensure the Japan-US alliance
and its effectiveness in order to cope with North Korea's nuclear
missiles.

(2) Shock waves of North Korea's nuclear test (Part 1): US weak spot
hit -- "double standard" of looking kindly at "nuclear club," such
as India, Pakistan

MAINICHI (Page 1) (Full)
October 11, 2006

North Korea has set off an underground nuclear test, but did it do
so out of desperation, prepared to face the sanctions that would
follow? Will the international community now recognize North Korea
as a nuclear power? What is America's strategy? We examine in this
series how the nuclear issue may now unfold.

"Do they really think we will now accept North Korea as a nuclear
power and respond to it with disarmament talks?" US Assistant
Secretary of State Christopher Hill, the chief negotiator to the

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six-party talks, asked angrily after Pyongyang test detonated a
nuclear bomb. "The DPRK will never be allowed to join the nuclear
club, Hill said firmly, adding, "We'll let it realize fully how high
a price it will have to pay for (setting off a nuclear blast)." It
is questionable, however, whether America has the guts to
substantiate its words toward North Korea in its policy.

The nuclear club is under America's control. North Korea, once named
by the US as a rogue state, has now become a nuclear power. This
leaves Middle Eastern countries including Iran with the impression
that the US indeed lacks a viable proliferation policy.

North Korea had been suspected of developing nuclear weapons since
the 1980s. The Korean Workers' Party in its Rodong Sinmun edition
yesterday, the day marking the 61st anniversary of its foundation,
tooted its own horn: "Our revolutionary armed force prepared
everything."

North Korea justified the test as a means to "denuclearize the
Korean Peninsula," but that is nonsense in outsiders' eyes.

Making the peninsula a nuclear free one is publicized as "the last
instruction given by the late President Kim Il Sung and the firm
will of General Secretary Kim Jong Il." But that idea has been with
the preconditions: "removal of the threat of US nuclear attacks" and
"normalization of diplomatic ties with the US."

Incidentally, however, in China, there is a deep-seated view
allowing North Korea to possess nuclear weapons. Shen Dingli, a
political scientist at Fudan University, said: "Can you assert that
America's possession of nuclear weapons is a good thing?" This
remark gives a glimpse of rivalry with the superpower US.

The six-party talks on the North Korean nuclear issue continued

TOKYO 00005929 004 OF 010


until last November. During the discussions, Japan, the US, and
South Korea frequently failed to move in tandem. Japan prioritized
the abduction issue, South Korea tended to be protective toward
North Korea, and the US remained tough. The North, taking advantage
of this difference in attitude, eventually stalled the talks.

Analysts think that North Korea may have followed in the footsteps
of Pakistan, which set off a nuclear test in 1998. Pakistan suffered
for its nuclear explosion when the international community imposed
economic sanctions, but after the 9/11 terrorist attacks in the US,
Washington lifted the sanctions in view of the strategic importance
of Pakistan as a partner in fighting the war on terror. Pakistan
rejoined the international community as a new nuclear power.

This summer the US reached a basic agreement with India to provide
nuclear technical assistance for peaceful purposes, though that
country is a nuclear power that has not yet signed the Nuclear
Non-proliferation Treaty (NPT). This new development has undermined
the NPT system that aims to stop countries other than the US,
Britain, France, China, and Russia from going nuclear. The decision
highlighted America's double standard, as evidenced by its soft
treatment of Pakistan and India, showing that the US shifts its
attitude depending on whether the country is viewed as an enemy or
friend. It is thus no wonder that Pyongyang took advantage of that
contradiction in setting its sights on becoming a future nuclear
power.

In 1993, North Korea declared it would withdraw from the NPT, and
this move set off the first nuclear crisis in 1994. Pyongyang
succeeded in holding a one-on-one dialogue with the US. In January
2003, Pyongyang again declared it would withdraw from the NPT, and
in February 2005 it announced its possession of nuclear arms. On the
heels of firing Taepodong missiles in this July and conducting a
nuclear test just recently, Pyongyang is triggering a second nuclear
crisis. The North Koreans appear to be cleverly using the US-led NPT
system against it. But whether the North can get membership in the
nuclear club depends on what policy the US will form toward it in
the months ahead.

(3) Shock waves from North Korea's nuclear test (Part 2): Bush
administration under fire even in nation over hard-line stance

MAINICHI (Page 2) (Full)
October 12, 2006

In defiance of strong international demands, North Korea has
conducted an underground nuclear test. Following this development,
the Bush administration in the United States has come under heavy
fire for its tough stance toward the North.

A former US official familiar with the negotiations between
Washington and Pyongyang lashed out at the Bush administration for
its rejection of direct negotiations with the "rogue state": "The
nuclear test proves that the Bush administration's policy toward
North Korea is a failure. The administration should have understood
that the problem can only be settled by negotiations."

This is not the first time for such criticism to be vented. When
North Korea's alleged production of highly-enriched uranium was
disclosed in 2002, a former US State Department official warned,
"The nuclear issue will never be resolved as long as the US
continues to turn the other cheek or refuse negotiations."


TOKYO 00005929 005 OF 010


The Bush administration has engaged in talks with North Korea only
under the framework of six-party talks on the North's nuclear
problem,

On Nov. 11 of last year, North Korea withdrew from the six-party
talks in reaction to Washington's financial sanctions. When the Bush
administration was inaugurated in 2001, North Korea possessed
plutonium for only one or two nuclear bombs. But US intelligence now
estimates that the DPRK now has enough plutonium to build about 10
bombs.

Senior researcher Mitchell at the Center for Strategic and
International Studies (CSIS) in Washington said, "The Bush
administration should have shown some flexibility in its policy
toward North Korea." The recent nuclear test must be a nightmare for
the US, which places emphasis on preventing the proliferation of
weapons of mass destruction. A growing number of observers are now
questioning the Bush administration's rejection of direct talks with
North Korea, even in face of a critical issue in terms of national
security, that is, a nuclear threat.

In Japan, former Defense Agency Director General Shigeru Ishiba
expressed his concern about possible reckless moves by Pyongyang
should it be driven into a corner by US economic sanctions. He said,
"If war breaks out, Japan will inevitably be involved." If military
tensions run high between the US and North Korea, the impact on
Japan would be unfathomable. "We must consider it as a possibility
that the US will respond to bilateral talks with North Korea,"
Ishiba said, but under the current situation, Japan cannot easily
suggest to the US that it enter into bilateral negotiations with the
North.

Former South Korean President Kim Dae Jung, who promoted a policy of
reconciliation with the North, exchanged views with President Roh
Moo Hyun on Oct. 10 and stressed the need for dialogue between the
US and North Korea. His suggestion represents the South Korean
government's longtime dissatisfaction with the Bush administration's
approach.

But the US government apparently has no intention for now of
reviewing its strategy toward North Korea. In a press conference on
Oct. 10, White House Spokesman Snow reiterated that the government
would continue the same policy line.

CSIS' Mitchell said, "During the remaining two years of its term,
the Bush administration can be expected to heighten its efforts to
drive North Korea further into isolation through expanded
cooperation with the remaining five members of the six-party talks
and other countries."

The view shared by experts is that North Korea, now prepared for
"isolation," has mapped out a long-term strategy to become a nuclear
power. The final goal of that strategy is to have the US sit down at
the negotiating table to solicit a pledge guaranteeing the survival
of the regime led by Kim Jong Il.

In direct talks with North Korea (in October 1994), the US agreed to
provide the North of two light-water reactors in exchange for
Pyongyang's suspension of its nuclear development program. Pyongyang
took this agreement as a major victory in its negotiations with the
US. The agreement was abrogated when allegations that North Korea
was engaged in a secret nuclear program emerged in 2002. But some
observers, keeping the agreement in mind, speculate that the North

TOKYO 00005929 006 OF 010


might be hoping to hold similar negotiations again.

The series of moves by North Korea starting with the missile
launches in July indicates, in a sense, the North's desire to draw
the US into nuclear disarmament negotiations this time, instead of
those on scrapping its nuclear weapons program.

Although the Bush administration has categorically said there will
be no policy switch, it may find itself facing a real nuclear and
missile threat in the near future.

(4) New prime ministerial secretaries enjoy deep confidence of Abe

NIHON KEIZAI (Page 5) (Almost full)
Evening, October 11, 2006

With the inauguration of the cabinet of Prime Minister Shinzo Abe,
all five prime ministerial secretaries were replaced. A noncareer
bureaucrat, who enjoys the confidence of Abe, was picked as
secretary for political affairs. Four career officials from the

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Ministry of Finance (MOF), the Ministry of Foreign Affairs (MOFA),
the Ministry of Economy, Trade and Industry (METI), and the National
Police Agency (NPA) were chosen as secretaries for administrative
affairs, as before. All five secretaries have close relationships
with Abe. Since Abe is ready to go up against the bureaucracy in
order to accelerate his reform drive, the four secretaries will
likely find themselves on the horns of a dilemma.

"Cheers!" On the night of Sept. 29, three days after the launching
of the Abe government, the prime minister and his five secretaries
got together at a Japanese restaurant in Tokyo. When Abe started
drinking Oolong tea, the five drank up their glasses of beer without
hesitating.

Unprecedented appointment of Yoshiyuki Inoue as chief secretary

Yoshiyuki Inoue, 43, was appointed as secretary for political
affairs. Inoue found a job in the now defunct Prime Minister's
Office (currently the Cabinet Office) in 1988, after working for
Japan National Railway (JNR) until it was privatized. He served as
administrative secretary to then Deputy Chief Cabinet Secretary Abe
from July 2000 to September 2003. He was named secretary for
political affairs to then Chief Cabinet Secretary Abe in November
2005. It is unprecedented for a noncareer bureaucrat to be appointed
to the post of chief secretary to the prime minister.

He gave up on attending a university for family reasons. After
graduating from high school in 1981, he worked at JNR as an engine
QQee@Wdriver for the Shinkansen bullet train. He graduated from the
economics department of Nihon University through correspondence
courses. He was placed in charge of reform of public interest
corporations and the project of constructing a new official
residence (Kantei). He also worked at the abduction issue liaison
office in the Cabinet Secretariat. Abe praised him, saying, "He
works for me and for the country wherever and whenever he can. He is
a reliable person."

Kazuho Tanaka, MOF official, has personal ties with many ruling
party lawmakers

Kazuho Tanaka, 51, a Ministry of Finance official, entered MOF in
1979, worked at the Budget Bureau, Financial Bureau, and Secretariat
Division. He also served as budget examiner for the Ministry of

TOKYO 00005929 007 OF 010


Health, Labor and Welfare. The point of contact between Tanaka and
Abe was the health and welfare policy clique in the Liberal
Democratic Party. Since he has personal ties with many ruling Diet
members, he will be a key person in dealing with social security
reform.

Shigeru Kitamura, NPA official, handled North Korea's abduction
issue

Shigeru Kitamura, 49, joined the National Police Agency in 1980, was
in charge of the abduction issue as director of the NPA Foreign
Affairs Division after serving as Tokushima Prefectural Police head
and NPA's Security Division chief. He reportedly gave helpful
information to Abe, when he was on the Liberal Democratic Party's
taskforce for the abduction Issue and was chief cabinet secretary.

Hajime Hayashi, MOFA official, favorite of Vice Minister Yachi

Hajime Hayashi, 48, entered the Foreign Ministry in 1982, serving in
the North American Affairs Bureau and the Treaties Bureau. He is
believed to be a favorite of Administrative Vice Minister Shotaro
Yachi, who is close to Abe.

Takaya Imai, METI official, worked at major bureaus, including the
Manufacturing Industries Bureau

Takaya Imai, 48, entered the Ministry of International Trade and
Industry (MITI, which is now METI) in 1982. He is a nephew of
Takashi Imai, honorary chairman of Nippon Steel, who chairs the
study group of business leaders supporting Abe. He has handled such
major issues as industrial policy and energy strategy. Since he
assumed his current secretarial post, he has devoted himself to
preparing Diet replies for Abe, working regularly until around 2:00
a.m.

The five secretaries serve as liaison bridges between the Kantei and
government offices. However, under the Abe administration, they have
to coordinate views also with special advisors to the prime
minister. It is certain that their duties will increase as Abe
intends to strengthen the Kantei-led management.

(5) Japan, China agree on closer cooperation in energy saving,
environmental protection

NIHON KEIZAI (Page 5) (Full)
October 9, 2006

In their joint news statement, Prime Minister Shinzo Abe and Chinese
President Hu Jintao stressed the need to deepen cooperative
relations in such areas as energy, environmental protection,
financial services, information-communication technology, and
protection of intellectual property rights. In order to keep a lid
on possible trade friction as a result of economic relations
becoming closer between Japan and China as a rising power, it is now
imperative for the two governments to strengthen their cooperative
setup. The statement noted, "The two countries will push ahead with
talks at such levels as cabinet ministers and officials concerned,
as well as dialogue between the public and private sectors."

The Japanese and Chinese leaders cited energy as the sector in which
the two countries strengthen cooperation for mutual benefits on a
priority basis. China has become the second largest energy-consuming
country, following the United States. Should China continue to use

TOKYO 00005929 008 OF 010


oil at the current pace, the security of Japan's procurement will be
undermined. Keeping such a possibility in mind, the government has
decided to help China to reduce its energy consumption.

In the energy-saving area, the two countries have already started
efforts to upgrade cooperative relations, including the holding of
an international conference in May bringing together representatives
from both the public and private sectors of the two countries.
China's energy efficiency is said to be only one-10th of Japan's.
The Ministry of Economy, Trade and Industry intends to offer
cooperation for China to improve its energy efficiency by offering
advice on fuel efficiency standards for autos and energy-saving
management of plants.

As for development of alternative energy resources, the ministry
will help China to effectively use coal. China uses coal for about
70% of total primary energy consumption. Japan also plans to
transfer its technology to liquefy coal at high temperatures or
pressures and produce gasoline and other products. A plan to
commercialize it in 2010 is also underway, and Japan hopes to grow
it into a large-scale cooperative project.

Since China is the largest producer of SO2, Japan might be seriously
affected by acid rain. In the environment area, Japan plans to offer
assistance to China on its policies and technologies to overcome
public environmental hazard, based on its experience.

Infringements by Chinese companies of Japan's intellectual property
rights, such as technologies and trademarks, are likely to stand in
the way of good bilateral economic ties. The Japanese government is
willing to work on China to establish a rigid intellectual
property-protection system, as well as to provide know-how to
prevent Chinese firms from exporting fake brand-name products at the
water's edge.

(6) Trend away from bid-rigging part 3: Surcharge leniency system is
bringing about self-cleansing

NIHON KEIZAI (Page 13) (Abridged slightly)
September 23, 2006

Mitsubishi Heavy Industries was the first company that was eligible
for the leniency system. The company voluntarily reported its
involvement in bid-rigging over a project to install tunnel
ventilators sponsored by the former Metropolitan Expressway Public
Corporation (now Metropolitan Expressway Company Ltd.). Senior
Managing Director Hideo Egawa, who reported at the company's board
meeting his decision to report the company's involvement in
bid-rigging activities to the Fair Trade Commission (FTC), made this
remark: "There were no arguments. No one opposed the idea."

Morale remain dampened

Being made the target of investigations many times over suspicion of
violating the Antimonopoly Law, Mitsubishi Heavy Industries has been
pointedly criticized as a regular participant in bid-rigging
activities. A source connected with the company said, "Our employees
are proud that their company launches rockets, but their morale was
dampened when their company was called a bid-rigging company."

The Tokyo High Public Prosecutors Office last May embarked on a
forcible investigation into a bid-rigging case over the construction
of a bridge. They arrested the then deputy manager of the Bridge

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Construction Department of Mitsubishi Heavy Industries. Following
the incident, the company in August the same year set up an
order-intake rationalization committee chaired by Senior Managing
Director Egawa. The panel scrutinized all business sections and
found that bid-rigging was carried out over the construction of
tunnel facilities.

After determining that bid-rigging was actually carried out, public
prosecutors late last fall got hold of what actually happened
through repeated hearings of the circumstances by attorneys. At that
time, the details of a surcharge reduction system, which was to
become one of the showcases of the revised Antimonopoly Law to be
implemented early in the next year, were beginning to become known.
The company decided to exploit this system, but Egawa remained
reticent about the issue, simply saying, "It was a natural course of
action."

A source familiar with the internal affairs of the FTC said, "In
order to demonstrate the revised Antimonopoly Law, too, public
prosecutors wanted a leading company as the target of the first
application of the leniency system." The FTC received a tip on
bid-rigging over the construction of tunnel facilities in perfect
harmony between public prosecutors and Mitsubishi Heavy Industries,
which wanted to apply for the application of the leniency system.

The FTC charged five companies with bid-rigging over the
construction of tunnel facilities. Of the five, Mitsubishi Heavy
Industries, which first admitted to unfair trade practices, was
exempted from paying surcharges. Ishikawajima-Harima Heavy
Industries and Kawasaki Heavy Industries, which did so after they
were subjected to raids by public prosecutors, were eligible for a
30% reduction. Hitachi did not admit to unfair trade practices,
since it was not aware that it was practicing bid-rigging." Ebara
Corporation did so, but failed to become one of three applicants
eligible for the application of the leniency system. Surcharges they
paid totaled 1.097 billion yen.

Voluntary restraint on "sweat-expending" rule

A series of crackdowns on bid-rigging practices and the enforcement
of the revised Antimonopoly Law have changed business practices in
the plant-construction industry. For instance, the industry had a
so-called sweat-expending rule, which determined successful bidders,
based on to what extent bidders contributed to project sponsors,
such as local governments and consulting companies, through prior
cooperation for design.

Power distribution is changing in the bridge construction field not
only because a number of companies pulled out of this business or
curtailed participation in it, but also because an open public
bidding system is restoring its functions. Yokokawa Bridge has
received orders for the construction of three bridges in Nagasaki
since this spring. An executive of the company stressed the changes
occurred: "Until now, Nagasaki has been the stronghold of Mitsubishi
Heavy Industries, which has a shipbuilding yard. We have had no room
to take part, but..."

Companies are complaining: "The rate of a contract price to an
estimated price is above the 60% level in most projects. This is
indeed difficult." Another wave of the selecting out and
reorganization of companies is about to come.

(7) JCP chief, other opposition leaders determined to win Okinawa

TOKYO 00005929 010 OF 010


election, stop new base

AKAHATA (Page 1) (Full)
October 12, 2006

A rally was held in Tokyo yesterday evening to encourage Keiko
Itokazu, who will run in Okinawa Prefecture's Nov. 19 gubernatorial
election, in which the question of whether to allow the US military
to have a new base built in the island prefecture will be the
biggest issue. The event was held with the participation of Kazuo
Shii, chairman of the Presidium of the Japanese Communist Party,
Yukio Hatoyama, secretary general of the Democratic Party of Japan
(Minshuto), Mizuho Fukushima, president of the Social Democratic
Party (Shaminto), and Yasuo Tanaka, representative of the New Party
Nippon (Shinto Nippon). There were also many Dietmembers, labor
union representatives, and citizens. They vowed to band together and
win the election.

"The campaign issue is whether we should let them build a new
military base," Shii said in his encouragement of Itokazu. "The
election is very important not only for the people of Okinawa
Prefecture but also for the future of Japan," Shii stressed. He
added: "Our five parties will enter into a sound policy agreement to
aim for an Okinawa with no military bases, and we will never let
them build any new base. We're now ready to struggle together. We
will solidify this stance. I'm sure we can win if we deliver our
voice to the population of Okinawa Prefecture. The Japanese
Communist Party will do its best."

At the same time, Shii emphasized: "If she wins, we can stop the
realignment of US forces in Japan. So the other side is also
desperate. Let us also struggle hard to back her up, and let us win
without fail."

Hatoyama criticized the government's plan to build a new base in a
coastal area of Camp Schwab as "deceitful." He stated that the DPJ
would do its best to win the election.

Fukushima stressed, "Let us win back the prefecture's governorship
for the first time in eight years, and let us change Japanese
politics from Okinawa."

Itokazu, appearing last, expressed her determination, and she
criticized Governor Inamine who remains unable to show any clear-cut
attitude although 75% of Okinawa Prefecture's people are opposed to
building a new military base with a V-shaped pair of airstrips in
Camp Schwab's coastal area. "The government has forced 75% of all US
military bases (in Japan) on the people of Okinawa Prefecture, and
the Constitution-guaranteed right to live has been trampled,"
Itokazu said, adding: "We will not let them build any more bases,
and we will not let them leave the bases as the negative legacy for
another 50 years or 100 years. So I made up my mind to run." She
concluded, "Backed by the voice of Okinawa Prefecture's people, I
want to struggle against the Japanese and US governments."

SCHIEFFER

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