VZCZCXRO7975
PP RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #1705/01 0900057
ZNR UUUUU ZZH
P 310057Z MAR 06 ZDK
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC PRIORITY 0364
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 8053
RUEHFK/AMCONSUL FUKUOKA 5420
RUEHOK/AMCONSUL OSAKA KOBE 8577
RUEHNAG/AMCONSUL NAGOYA 5427
RUEHKSO/AMCONSUL SAPPORO 6604
RUEHBJ/AMEMBASSY BEIJING 1433
RUEHUL/AMEMBASSY SEOUL 7611
RUCNDT/USMISSION USUN NEW YORK 9554

UNCLAS SECTION 01 OF 11 TOKYO 001705 
 
SIPDIS 
 
SIPDIS 
 
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 03/31/06 
 
 
Index: 
 
1)   Top headlines 
2)   Editorials 
3)   Prime Minister's daily schedule 
 
4)   President Bush in speech praises Japan's democracy, 
  contributions to peace, while criticizing China's oppression of 
  freedom 
 
Iraq reconstruction aid: 
5)   Japan asked to continue assistance to Iraq 
6)   Foreign ministers of Japan, Britain to meet in May, agree on 
difficulty to set timetable for withdrawal of troops from Iraq 
 
7)   Japan pressed by US to fall in line with its diplomacy 
  toward Iran and the nuclear issue 
 
China ties: 
8)   Shocking suicide notes left by Shanghai consulate employee 
  detailing entrapment and intimidation by Chinese intelligence 
  agencies 
9)   Former prime minister Hashimoto, now leading large 
delegation to China, to meet President Hu today 
10)  New Komeito protests delay in ODA loans to China 
11)  New Ambassador to China Miyamoto sees improvement coming in 
Japan-China relations 
12)  China tones down criticism somewhat of Japan's new textbook 
screenings 
 
13)  South Korean government calls in Ambassador Oshima to blast 
  him on new crop of Japanese history textbooks 
 
Defense issues: 
14)  Aomori accepts installation of X-Band, new US radar system 
15)  JDA chief Nukaga holds talks with mayors in cities near Nago 
over Futenma issue 
16)  METI Minister Nikai to submit bill to Diet raising status of 
JDA to ministry 
 
17)  Visiting Commerce Secretary seeks US-Japan cooperation to 
  press China for monetary policy reform 
 
18)  US explains that bones found in Hong Kong shipment of US 
  beef posed no safety risk 
 
19)  Report shows potential growth rate for Japan at 1.3%, 
  highest in a decade 
 
20)  Chief Cabinet Secretary Abe taking lead in study of social 
  disparity issue 
 
21)  Muraoka acquitted of charges of taking illegal dental 
  association check, raising greater question of former prime 
  minister Hashimoto's role in the incident 
 
22)  Former ambassador to US Kuriyama appointed to serve as 
  advisor to the Emperor 
 
Articles: 
 
1) TOP HEADLINES 
 
TOKYO 00001705  002 OF 011 
 
 
 
Asahi, Mainichi, Sankei, and Tokyo Shimbun: 
 
Former Chief Cabinet Secretary Kanezo Muraoka acquitted of charge 
of having concealed 100-million-yen donation from Japan Dental 
Association to Hashimoto faction; Tokyo District Court rules 
former treasurer's testimony not credible, suggesting donation 
was given directly to Hashimoto 
 
Yomiuri: 
Suicide notes by Japanese diplomat in Shanghai testify to China's 
persistent pressure to reveal secrets 
 
Nihon Keizai: 
Daiichi Sankyo to purchase Zepharma from Astellas to follow top 
drug maker Taisho 
 
2) EDITORIALS 
 
Asahi: 
(1)  Muraoka acquitted: Hashimoto's turn to answer questions 
(2)  Revision to the Immigration Control and Refugee Recognition 
Law: Merits and demerits on fingerprinting foreign visitors 
 
Mainichi: 
(1)  Muraoka acquitted over 100-million-yen donation scandal: Who 
is the bad guy? 
(2)  NEET and job-hopping part-time workers not "losers" 
 
Yomiuri: 
(1)  Muraoka ruling shows murky side of politics 
(2)  Bid rigging-preventing reduced surcharge system worked 
 
Nihon Keizai: 
(1)  Rice futures market must be approved 
(2)  Muraoka ruling points to true culprit 
 
Sankei: 
(1)  Muraoka cleared in donation scandal: What is the truth? 
(2)  Learn lessons from high-rise apartment building ruling to 
build pleasant communities 
 
Tokyo Shimbun: 
(1)  Muraoka acquitted: Dark side of bypass donation not 
clarified 
(2)  Deep gulf remains over pluthermal project 
 
3) Prime Minister's Official Residence (Kantei) 
 
Prime Minister's schedule, March 30 
 
NIHON KEIZAI (Page 2)  (Full) 
March 31, 2006 
 
11:00 
Met at Kantei with Naoki Tanaka, who will become chairman of the 
Postal-Privatization Committee, and followed by Chief Cabinet 
Secretary Abe. Met again with Tanaka. 
 
SIPDIS 
 
14:00 
Met with Chairman Iida of the expert panel on sliming and making 
administration effective, Administrative Reform Minister Chuma, 
 
TOKYO 00001705  003 OF 011 
 
 
and Administrative Reform Promotion Chief of Secretariat Matsuda. 
 
15:00 
Met with Ambassador to Iraq Suzuki. 
 
16:00 
Met with METI Minister Nikai, Natural Resources and Energy Agency 
Director General Kodaira. Met afterwards with Deputy Chief 
Cabinet Secretary Futahashi. 
 
17:23 
Met with Gender Equality Minister Inoguchi and Gender Equality 
Bureau chief Natori. 
 
19:00 
Met at his official residence with Upper House Budget Committee 
Chairman Ono and chief director Ichikawa, and Deputy Chief 
Cabinet Secretary Suzuki. 
 
4) US President Bush, showing clear differences in his approach, 
criticizes China's suppression of freedom, while praising Japan's 
contributions to peace 
 
SANKEI (Page 7) (Full) 
March 31, 2006 
 
By Yoshihisa Komori in Washington 
 
US President George W. Bush brought up China's suppression of 
freedom in a speech on freedom and democracy delivered in 
Washington, DC, and in a subsequent question-and-answer session 
on March 29, he declared that he would critically refer to 
religious suppression and other issues in China in an upcoming 
meeting with Chinese President Hu Jintao. Meanwhile, Bush 
repeated his praise for Japan's contributions to democracy and 
peace, clearly indicating differences in his approaches to these 
two nations. 
 
Bush delivered this speech at Freedom House headquarters, a 
private organization for advancing democracy, in Washington. In 
the speech, Bush stated freedom and democracy are also taking 
root in Iraq. In the subsequent question-and-answer session, Bush 
referred to the lack of democracy in China and stated, "I will 
tell President Hu Jintao, who is expected to visit us shortly, 
not to be afraid of a free society." In addition, he revealed he 
was reading Mao, a book depicting the life of President Mao Tse- 
tung, telling the audience, "I keenly realize how the rest of the 
world was deceived by (President Mao) and how cruel China was." 
 
Speaking of the planned meeting with the Chinese president in 
late April, Bush revealed that in the meeting, he would directly 
criticize China's suppression of freedom, including religious 
oppression. Bush noted: "I will discuss freedom and frankly tell 
Mr. Hu about a number of conversations with the Dalai Lama, the 
concerns of Catholic churches as well as those of Evangelical 
churches in China, and other matters. I will also tell him that a 
healthy society is not built only by the market-opening 
principles." 
 
In answering questions about democratization in the Middle East, 
Bush emphasized that democracy and freedom were not something 
peculiar to the United States but they are the universal concepts 
 
TOKYO 00001705  004 OF 011 
 
 
that prevail on the globe. He then mentioned his relationship 
with Prime Minister Junichiro Koizumi and stated: "Prime Minister 
Koizumi is not only a good friend but also a partner for me in 
pursuing peace. Nearly 1,000 Japanese troops are now stationed in 
Iraq. This is the result of Prime Minister Koizumi having a good 
grip on the benefits of democracy in the Middle East." 
 
Additionally, Bush repeatedly emphasized the values of democracy 
in Japan, noting: "Because Japan became a democratic nation and a 
peace-loving nation, the leaders of Japan and the United States 
can have discussions. Turning Japan into a democratic nation was 
the right thing to do. This fact is a lesson to be noted." 
 
5) Iraqi delegation expresses hopes for Japan's continued 
assistance to Iraq 
 
MAINICHI (Page 3) (Full) 
March 31, 2006 
 
A group of 10 Iraqi leaders, including the mayor of Muthanna 
Province in southern Iraq, who are on a mission to Japan to study 
local autonomy, held a press conference at the Foreign Ministry 
yesterday. Provincial assemblyman Alzayadi commented on the 
Ground Self-Defense Force's mission in the province, "It is the 
Japanese government's responsibility to decide on a withdrawal. 
We will respect your decision." He also expressed hopes for 
Japan's continued assistance to Iraq, saying, "We hope that 
either the SDF, the Foreign Ministry or private corporations will 
continue carrying out activities in Iraq even after a new 
government is established." 
 
6) Japanese, British foreign ministers to meet in May on 
timetable for GSDF withdrawal; Pullout in April now difficult 
 
NIHON KEIZAI (Page 2) (Full) 
March 31, 2006 
 
Coordination has started for Foreign Minister Taro Aso and his 
British counterpart Jack Straw to meet in Tokyo in May. Britain 
is in charge of ensuring security in the southern part of Iraq. 
The aim of the planned Japan-Britain meeting is to discuss a 
timeframe for a withdrawal of Ground Self-Defense Force (GSDF) 
troops stationed in Samawah. The Japanese government was planning 
to pull them out of Iraq in two stages during the April - June 
period, but if the foreign ministerial is arranged for May, it 
will become impossible for Japan to withdraw GSDF in April. 
 
The inauguration of Iraq's permanent government has been delayed. 
Given this, Aso during the recent Japan-US-Australia strategic 
dialogue at the foreign minister level put off a judgment on the 
timing for a GSDF withdrawal. Britain intends to reduce its 
troops in Iraq in May as scheduled. 
 
7) UNSC statement on Iran's nuke program: Japan urged to act in 
concert on diplomatic front 
 
SANKEI (Page 5) (Full) 
March 31, 2006 
 
In connection with Iran's nuclear program, the United States has 
now informally called on Japan to halt its Azagaden oil field 
development project in Iran. Meanwhile, the United Nations 
 
TOKYO 00001705  005 OF 011 
 
 
Security Council has adopted a chairman's statement on the issue. 
Japan, now pressed to make a decision, will have to pay for its 
failure to review its bilateral relations with Iran and its 
energy strategy. 
 
"If we're nuclear-armed, no one would challenge us any more. 
Anyone trying to do so will have to pay dear for that." This 
statement came from Ali Larijani, secretary general of Iran's 
Supreme National Security Committee (SNSC), when he addressed a 
national meeting of political leaders from Iran's Islamic 
Revolution Guards Corps (IRGC) on November 30 last year. 
 
"Iran has a firm resolve to go nuclear. A nuclear-armed Iran 
would come out with dauntless, offensive foreign policies." This 
warning came from Gregg Schulte, US representative to the 
International Atomic Energy Agency (IAEA) and US ambassador to 
the United Nations agencies in Vienna. US Under Secretary of 
State Joseph, who is in charge of arms control and international 
security, presumes that Iran has enough nuclear materials to 
produce highly enriched uranium for "10 nuclear weapons." In his 
analysis, the US government official predicts that Iran would 
acquire nuclear development capability in "5-10 years." 
 
"Iran is dealing with several countries in an attempt to divide 
the international community and threatening to stop trade and 
oil," Ambassador Schulte said. Meanwhile, Iranian Foreign 
Minister Mottaki delivered a speech in Tokyo on March 1. In the 
speech, Mottaki issued a warning to Japan, Iran's best customer 
that buys about 27% of that country's crude oil output. He said, 
"Our close bilateral relationship must not be hurt by any third- 
party (US) intervention." 
 
The United States' strategy is to isolate Iran. But "it wouldn't 
be a deal for Iran to stop uranium enrichment," says Koichiro 
Tanaka, director of the JIME Center at the Institute of Energy 
Economics, Japan. As it stands, the United States and Iran remain 
wide apart from each other. Russia was expected to act as a go 
between the two countries but it is now speaking for Iran. 
 
The UNSC, from now on, will not likely go any further than to 
adopt a resolution denouncing Iran at best and not go so far as 
to adopt a resolution calling for sanctions against Iran. The 
United States would then form a "coalition of the willing" with 
its allies to implement sanctions against Iran, and the US-led 
coalition would step up its pressure... Such a scenario is seen 
as likely. "Japan will be sandwiched there," says Kunihiko 
Miyake, formerly a Foreign Ministry bureaucrat and now 
representing a foreign policy think tank. 
 
The coalition would not take all-out economic sanctions at once. 
They would begin with restricting investments and freezing 
assets. And then, they will likely go on with sanction measures 
in stages, such as issuing no passports (sic) to high-ranking 
Iranian officials and prohibiting overseas travels. However, some 
doubt such sanctions when it comes to their actual effectiveness. 
 
In response to the UNSC chairman's statement, Senior Vice Foreign 
Minister Yasuhisa Shiozaki said Japan would continue to work on 
Iran. But the United States, in its heart of hearts, has no 
expectations for Japan. The United States is rather casting 
distrustful eyes on Japan. "The key to our diplomatic strategy 
toward Iran is that countries concerned about Iran's activities 
 
TOKYO 00001705  006 OF 011 
 
 
act in concert," Schulte said. This US message had Japan in mind. 
 
Japan will now have to make up its mind to give up on Iranian 
oil. That's not only from the perspective of consideration for 
the United States. "For Japan," Miyake said, "it's not choosing 
between the United States and oil, it's choosing between oil and 
nuclear nonproliferation." He added: "Japan should stop nuclear 
proliferation even at the sacrifice of oil. That's Japan's good 
sense as the only atomic-bombed nation. Japan should not cave in 
to Iran's pressure. That's important." 
 
8) Suicide notes of Shanghai consulate official reveals pressure 
to reveal secrets by China side and threats to five information 
on other diplomats; Decided to commit suicide when asked for 
codes next 
 
YOMIURI (Top play) (Excerpt) 
March 31, 2006 
 
This newspaper obtained the contents of a suicide note sent to 
the consul general by a Japanese diplomat (then 46) assigned to 
the Shanghai Consulate General. The diplomat committed suicide in 
May 2004. The note revealed that the diplomat was forced by 
Chinese intelligence agents to provide diplomatic secrets and 
other information, and it details the process that led to his 
decision to commit suicide. In the note obtained by this 
newspaper, the Chinese intelligence agents ask him to tell them 
from which ministry or agency each consulate official came. The 
note details the persistent and clever tactics used by the 
agents, such as pressing him to tell them the names of Chinese 
contacts of consulate officials. The note is ample proof for the 
Japanese government to judge that there was a violation of the 
Vienna Convention. There is also a document in Chinese that was 
used by the agents to put pressure on the individual. The Chinese 
government has denied having anything to do with the suicide, but 
the contents of the note and the document contradict its claim. 
 
9) Delegation of seven groups to China, headed by Hashimoto, 
arrives in Beijing for talks with President Hu today 
 
NIHON KEIZAI (Page 2) (Full) 
March 31, 2006 
 
Manabu Morimoto, Beijing 
 
A delegation of seven groups to promote Japan-China friendship, 
headed by former Prime Minister Ryutaro Hashimoto, arrived in 
Beijing yesterday. Hashimoto has served as chairman of the Japan 
International Trade Promotion Association. The delegation will 
meet with President Hu Jintao at the Great People's Hall today. 
This will be the Chinese president's first meeting with Japanese 
politicians since meeting Liberal Democratic Party Secretary 
General Tsutomu Takebe and New Komeito Secretary General Tetsuzo 
Fuyushiba last May. 
 
The delegation is visiting China at the invitation of the China- 
Japan Friendship Association. This is the first large-scale 
Japanese mission to China since Prime Minister Junichiro Koizumi 
visited Yasukuni Shrine last October. Hu is expected to give an 
"important lecture" on bilateral relations during his meeting 
with Hashimoto, former Foreign Minister Masahiko Komura, who 
chairs the cross-party Federation of Diet Members for Promoting 
 
TOKYO 00001705  007 OF 011 
 
 
Japan-China Friendship, and other members. Attention is now paid 
to what message the top Chinese leader will deliver on the 
strained relations between Japan and China. 
 
10) New Komeito protests Foreign Ministry's decision to defer yen 
loans to China 
 
MAINICHI (Page 3) (Full) 
March 31, 2006 
 
New Komeito called yesterday Foreign Ministry Economic 
Cooperation Bureau Director-General Shigekazu Sato to its Foreign 
Affairs Division to protest the ministry's postponement of its 
decision on yen loans to China for fiscal 2005, saying, "It is 
meaningless to shelve the decision." Secretary General Tetsuzo 
Fuyushiba expressed strong displeasure, saying: "The Foreign 
Ministry did not consult with the New Komeito beforehand. The 
Liberal Democratic Party is not the only party that is supporting 
the Foreign Ministry." 
 
11) "There is ample possibility to improve Japan-China 
relations," says new Ambassador to China Miyamoto 
 
MAINICHI (Page 2) (Full) 
March 31, 2006 
 
Commenting on the strained Japan-China relations, Ambassador to 
China Yuji Miyamoto, who is to take his post on April 10, in 
yesterday's interview to the Mainichi indicated a perception: 
"Both countries are in agreement on the point that relations with 
the other country are important. There is ample possibility to 
improve bilateral relations." 
 
12) Screening of school textbooks: China restrains criticism 
 
MAINICHI (Page 2) (Full) 
March 31, 2006 
 
The Ministry of Education, Culture, Sports, Science and 
Technology (MEXT) has ordered that school textbooks to be 
screened for next spring should mention that the Senkaku Islands 
(known as the Diaoyu isles in China) belong to Japan. Deputy 
Director General Qin Gang of the Chinese Foreign Ministry Press 
Bureau yesterday responded, "The Diaoyu and islets belonging to 
it have been China's territory since ancient times. There are 
unquestionable legal grounds for our claim." He, however, did not 
protest to the Japanese government. His criticism was restrained, 
compared with past comments. 
 
The Chinese side apparently stopped short of provoking Japan, 
because President Hu Jintao was scheduled to meet with former 
Prime Minister Ryutaro Hashimoto on March 31, yesterday and 
release a key dialogue designed to improve bilateral relations. 
 
13) Screening of school textbooks: South Korea lodges protest 
with Ambassador Oshima 
 
MAINICHI (Page 2) (Full) 
March 31, 2006 
 
Foreign Affairs and Trade Minister Ban Ki-moon of South Korea 
yesterday called in Japanese Ambassador Shotaro Oshima to the 
 
TOKYO 00001705  008 OF 011 
 
 
Ministry of Foreign Affairs and Trade. Referring to the order 
given by the Japanese Ministry of Education, Culture, Sports, 
Science and Technology (MEXT) that high school textbooks to be 
screened in fiscal 2005 should mention that Takeshima, known as 
Toku-do in South Korea, are Japan's territory, Ban expressed his 
regret: "It is regrettable that Japan has taken a measure that 
could erode the sovereignty of South Korea amid ongoing efforts 
to dissolve the stalemated bilateral relations." 
 
Ambassador Oshima sought understanding from him, noting: "The 
screening was carried out properly, based on the examination 
system. It is Japan's consistent position regarding Takeshima." 
 
14) Aomori governor and Tsugaru mayor agree to deployment of US 
military's X-band radar 
 
YOMIURI (Page 4) (Full) 
March 31, 2006 
 
Aomori Gov. Shingo Mimura and Tsugaru Mayor Hiroyoshi Fukushima 
held a press conference at the prefectural government office 
yesterday in which they expressed their agreement to the planned 
deployment of mobile X-band radar at the Air Self-Defense Force's 
Shariki detachment base in the city. The radar was developed by 
the US military to build an early warning system to intercept 
ballistic missiles. The deployment of the radar will be 
incorporated into the US force realignment final report to be 
compiled in April. 
 
15) Nukaga holds talks with mayors of municipalities around Nago 
 
MAINICHI (Page 3) (Full) 
March 31, 2006 
 
Defense Agency Director General Fukushiro Nukaga held talks last 
night at his agency with the mayors of four municipalities around 
Nago, Okinawa Prefecture. Given the difficulty to obtain Nago's 
consent on the planned relocation of the US Marine Corps' Futenma 
Air Station to the coastline of Camp Schwab, the defense chef 
sought their cooperation. 
 
16) Lawmakers to sponsor bill upgrading Defense Agency to a 
ministry: METI Minister Nikai 
 
TOKYO SHIMBUN (Page 2) (Full) 
March 31, 2006 
 
Economy, Trade and Industry Minister Toshihiro Nikai yesterday in 
a general meeting of his faction promoted a set of bills to 
upgrade the Defense Agency to the status of a ministry: 
 
"It is desirable that (the government will submit) the bills 
since they are designed to reform the government organization. 
However, if the government is reluctant to do so, we are ready to 
present them as bills sponsored by lawmakers." 
 
The faction is now calling on LDP lawmakers to sign up to sponsor 
the bills. 
 
17) US Secretary of Commerce Gutierrez: "Japan, US need to work 
together for a China's currency reform" 
 
 
TOKYO 00001705  009 OF 011 
 
 
NIHON KEIZAI (Page 9) (Full) 
March 31, 2006/03/31 
 
US Secretary of Commerce Gutierrez yesterday was interviewed by 
the Nihon Keizai Shimbun in Tokyo, and in the interview, he 
indicated an intention to join hands with Japan to urge the 
Chinese government to reform the yuan, saying, "The currency 
issue is the common matter of concern for both the Japanese and 
US economies." Gutierrez also indicated that revaluing the yuan 
would help improve America's trade deficits. On the US beef 
issue, he again called on the Japanese government to reopen its 
beef market to the United States as quickly as possible. 
 
Gutierrez pointed out, "There is indeed the concern about whether 
the value (of the yuan) is adequate." Citing the submission of a 
bill intended to impose sanctions on China by influential US 
senators, he urged Beijing to revalue the yuan even further. 
 
Additionally, Gutierrez analyzed: "The US trade deficit is 
closely linked to (the exchange rate of) the yuan," explaining 
that the US' current account deficit has been brought about 
chiefly by trade with China. 
 
18) It was haunch bones that were included in beef shipment to 
Hong Kong, US replies to Japan's inquiry 
 
MAINICHI (Page 2) (Full) 
March 31, 2006 
 
The Ministry of Agriculture, Forestry and Fisheries (MAFF) 
yesterday announced that it received a reply from the US to a 
question it asked about the inclusion of bones in US beef 
shipment to Hong Kong. According to the reply provided by the US, 
two chips 2.5 - 5 centimeters long from parts sticking out of 
haunch bones were found in the shipment. The US said that the 
inclusion of such bones is not a breach of the import conditions, 
because they are not a risk material. Hong Kong imports only 
boneless beef from the US. It suspended imports in mid-March from 
the meat packer that shipped the product in question. However, 
the US appears to be claiming that it is not possible to say that 
the inclusion of bone chips are the same as beef with bones 
attached. 
 
19) Projection for growth potential for fiscal 2005 reaches ten- 
year high of 1.3%, according to provisional calculations by 
Cabinet Office 
 
NIHON KEIZAI (Page 2) (Excerpts) 
March 31, 2006 
 
The Cabinet Office has estimated that growth potential, which 
indicates the Japanese economy's growth performance, for fiscal 
2005 increased to 1.3%, up 0.1 points from the preceding year. 
The recovery of capital investment and improved productivity has 
raised the fundamental power of the Japanese economy, leading to 
the surge in the growth potential. The figure is the highest 
since 1995, when such a figure reached 1.5%. The Cabinet Office 
sees that the economy is about to emerge from the deflationary 
cycle due to the correction of the situation in which the actual 
growth rate has been underperforming growth potential. 
 
The Cabinet Office has calculated the growth potential for fiscal 
 
TOKYO 00001705  010 OF 011 
 
 
2005, based on the revised value of the gross domestic product 
(GDP) for the October-December quarter last year. It is worked 
out, based on the amount of capital companies invested in their 
plants and manufacturing facilities, productivity, which reflects 
the development of technology and production efficiency, and the 
labor force needed for production activities. 
 
Of the growth potential of 1.3%, capital contribution accounts 
for 0.5 points, productivity for 1.1% and labor force for 
negative 0.3%. The recovery of business showings has boosted 
corporate production capacity as well as management efficiency. 
 
20) With an eye on the presidential race, Abe takes lead in 
discussion on measures to offer second chance for success, seen 
as move to forestall criticism of income disparity, 
 
NIHON KEIZAI (Page 2) (Excerpts) 
March 31, 2006 
 
In its first meeting yesterday, the government's Second Challenge 
Promotion Conference, chaired by Chief Cabinet Secretary Shinzo 
Abe, started discussion on measures to help out-of-work people or 
failed entrepreneurs gain a second chance for success. Abe 
instructed panel members to work out specific measures, including 
those to back up companies' intermediate recruitment. Some 
observers speculate that Abe, having an eye on the Liberal 
Democratic Party presidential race in September, started moves to 
forestall criticism of a widening gap in society allegedly caused 
by structural reforms. 
 
In yesterday's meeting, Abe said: "It is important to build a 
society that offers a second chance at success and not to fix the 
group of winners and the group of losers. He mentioned the words 
"a second chance" as many as seven times. He asserted that 
although a certain level of income disparity is unavoidable, "it 
is necessary to increase chances to try again, instead of 
distributing wealth with 'equality' as the buzzword." 
 
Many officials in the LDP voice concern about the disparity 
between winners and losers widening in society. The possibility 
is strong that if Abe runs for the presidential race, the focus 
of his election campaigning will be "second chance" measures. 
 
21) Former Chief Cabinet Secretary Muraoka acquitted of 
concealing 100 million yen political donation; Tokyo District 
Court determines testimony of former treasurer not credible; 
Perhaps covering up for Hashimoto 
 
ASAHI (Top Play) (Excerpts) 
March 31, 2006 
 
Tokyo District Court presiding judge Masaaki Kawaguchi yesterday 
acquitted former chief Cabinet Secretary Kanezo Muraoka, 74, of 
the charge of having concealed a 100 million yen political 
donation by the Japan Dental Association to the former Hashimoto 
factions' political organization Heisei Kenkyu Kai (Heisei Study 
Group) of the Liberal Democratic Party (LDP). The concealment was 
alleged to be in violation of the Political Funds Control Low. 
The presiding judge determined that the testimony by Toshiyuki 
Takigawa, then treasurer of the faction, was not credible. The 
testimony was the pillar of the prosecutions' allegation that 
Muraoka had ordered Takigawa to hide the donation. The judge 
 
TOKYO 00001705  011 OF 011 
 
 
underscored the possibility of Takigawa having made the false 
testimony to prevent the scandal from causing trouble for former 
Prime Minister Hashimoto, who then headed the faction, and 
Hiroshi Motojuku, the LDP's chief of secretariat, while pointing 
out the possibility that the 100 million yen might have been a 
donation to Hashimoto himself. 
 
The presiding judge pointed out the reason for the possibility of 
Takigawa having given a false testimony: 
 
"Because he made the false testimony to prevent the scandal from 
causing trouble for former Prime Minister Hashimoto and other LDP 
officials, as well as minimize damage to the faction. He also 
tried to prevent the scandal from revealing the LDP's murky 
handling of political donations by bringing about investigations 
into Motojuku. There is the possibility that he made false 
statements, by mentioning the retired senor LDP official after 
being defeated in the election." 
 
Moreover, the judge stated: 
 
"(If not issuing a receipt was Hashimoto's intent) It is 
conceivable that since the former prime minister headed the 
faction, chances are strong that he will be charged with a 
violation of the Political Funds Control Law. It is only natural 
to think that treasurer Takigawa tried to avoid the scandal 
causing trouble for the former prime minister and the Heisei 
Study Group." 
 
22) Former ambassador to US Kuriyama to become advisor to Emperor 
in post at Imperial Household Agency 
 
TOKYO SHIMBUN (Page 3) (Full) 
March 31, 2006 
 
Former Ambassador to the US Takakazu Kuriyama, 74, and Tokyo 
University Professor Emeritus Taichiro Mitani, 69, will assume 
positions at the Imperial Household Agency, effective on April 1. 
They will serve as advisors to the Emperor. Incumbent advisors -- 
Toshijiro Nakajima, 80, and Katsuya Onishi, 77 -- will step down 
from their posts as of today. 
 
Joining the Foreign Ministry in 1954, Kuriyama served in such 
posts as administrative vice minister, advisor to the ministry, 
and ambassador to the United States. 
 
Mitani is a specialist in modern Japanese history. He headed the 
Japanese team of the Japan-South Korea History Study Committee, 
which compiled a report in 2005. 
 
DONOVAN