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UNCLAS SECTION 01 OF 13 TOKYO 002540 
 
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:  DAILY SUMMARY OF JAPANESE PRESS 05/10/06 
 
INDEX: 
 
(1) Prime minister's statement that it is "not necessary for Mori 
faction to support one candidate in LDP presidential candidate" 
creating a stir; Pattern of confrontation between Abe and anti- 
Koizumi forces becoming clear; Forces outside Mori faction now 
finding it easier to express support for Fukuda 
 
(2) 2006 LDP presidential race: Junior members supportive of Abe 
for generational change in party are digging in heels against 
veteran Fukuda, whose supporters are eager to join party 
mainstream 
 
(3) Ozawa ends silence on education, US force realignment 
 
(4) Kakushin (Matter of Heart) column - Positions of LDP, New 
Komeito, DPJ about constitutional revision far apart over Article 
9 
 
(5) Poll: 42% want Constitution's Article 9-1, 9-2 left intact, 
43% want both paragraphs rewritten or amended in part 
 
(6) US consul general: Okinawa's proposed plan for constructing 
temporary helipad "is not sufficient"; Urges quick action to 
construct V-shaped airstrips 
 
(7) US force realignment settled through defense chiefs' talks; 
"Real water" demonstrates transformed Japan-US alliance 
 
(8) Japan to reject China's proposal for joint natural gas 
exploration near Senkaku Islands during gas exploration talks to 
be resumed next week 
 
(9) Leading Japanese, European manufacturers to develop Indian 
market, based in ASEAN, using FTAs and production facilities 
there 
 
(10) Income survey; Widening disparity in 30-49 age bracket; Gini 
coefficient rose 30% between 1987 and 2002 
 
(Corrected copy) Construction of Futenma alternative facility 
will cost over 300 billion yen, 100 billion yen less expensive 
than Henoko offshore plan 
 
ARTICLES: 
 
(1) Prime minister's statement that it is "not necessary for Mori 
faction to support one candidate in LDP presidential candidate" 
creating a stir; Pattern of confrontation between Abe and anti- 
Koizumi forces becoming clear; Forces outside Mori faction now 
finding it easier to express support for Fukuda 
 
NIHON KEIZAI (Page 2) (Full) 
May 1, 2006 
 
Commenting on the Liberal Democratic Party's (LDP) presidential 
election in September to choose his successor, Prime Minister 
Junichiro Koizumi stated that it would not be necessary for the 
Mori faction, to which he had belonged before becoming prime 
minister, to support a unified candidate. His statement meant 
that faction members Chief Cabinet Secretary Shinzo Abe and 
former Chief Cabinet Secretary Yasuo Fukuda could both run in the 
race. The blowback from his statement is still being felt. Though 
 
TOKYO 00002540  002 OF 013 
 
 
his remark has paved the way for Abe to run in the election by 
checking the move to pick Fukuda as a single candidate, it has 
also made it easier for anti-Koizumi and Abe forces outside the 
faction to overtly express their support for Fukuda. The skirmish 
in the run-up to the LDP presidential election is gradually 
heating up. 
 
Silence is expression of displeasure 
 
Although it sounded as if the prime minister had encouraged free 
competition in the presidential election, LDP members have 
interpreted his remark differently. It is clear that Abe is the 
person the prime minister has in mind as his successor. Koizumi 
made his statement on the pretext of avoiding a split in the Mori 
faction, but by saying so, he seems to have rejected a plan 
envisaged by former Prime Minister Yoshiro Mori and others who 
are working to have the faction pick Fukuda as its only 
candidate. In response to the prime minister's statement backing 
him, Abe lined up with him: "Factions no longer have a propensity 
to stand together and go forward with everything in perfect 
order." 
 
Internal Affairs Minister Heizo Takenaka, who has frequently 
worked with Abe over economic policy, echoed his remark; "The 
prime minister's pet argument is that neither elections nor 
personnel appointments should be handled in terms of factions." 
Mori has been silent, which is being taken as an expression of 
his displeasure. 
 
Asked about whether he talked with Mori since he made that 
statement, the prime minister said the same day, "I have not had 
contact with him at all." 
 
The prime minister's "recommendation of abandoning a faction- 
based approach" to the upcoming presidential race has also made 
it easier for anti-Koizumi and Abe forces other than the Mori 
faction to voice their views on the election. 
 
Split of Mori faction possible 
 
Commenting on the possibility of the Mori faction splitting over 
which contender to support -- Abe or Fukuda -- former LDP 
Secretary General Koichi Kato pointed out during a TBS TV talk 
 
SIPDIS 
show, "I think there is such a possibility." As a campaign issue 
for the presidential race, he cited Asia diplomacy, including 
policy toward China, whose relations with Japan have been 
strained over the prime minister's visits to Yasukuni Shrine, and 
the social divide, which has widened due to the promotion of 
structural reforms. 
 
The New Generation's Forum for Cooperation with Asia, a study 
group of first-term Lower House members, including Masaaki Taira, 
yesterday held an inaugural meeting, bringing together nine 
participants. Rumor has it that the group, which advocates the 
rebuilding of an Asia diplomacy, may try to pave the way for 
Fukuda, who plays up importance of Asia diplomacy, to run for the 
race. 
 
Amid a growing confrontation between Abe and Fukuda, Finance 
Minister Sadakazu Tanigaki and Foreign Minister Taro Aso are 
increasingly worried that their chances for the prime 
ministership might sink into oblivion. 
 
 
TOKYO 00002540  003 OF 013 
 
 
Commenting on the prime minister's statement, Aso during 
yesterday's conference bluntly noted, "The statement is about the 
Mori faction. Since it has nothing to do with me, I am not 
interested in it." Tanigaki also flatly said, "I have no special 
comment to make." 
 
Yosano's name floated 
 
As a result of the Koizumi statement, anti-Koizumi and Abe forces 
now find it easier to make their moves, but Fukuda has yet to 
decide whether to run for the race or not. He will visit the US 
from May 10 through 18. He plans to meet with former US 
Ambassador to Japan Baker and other prominent officials to stress 
his efforts to deal with Asia diplomacy and Japan-US relations. 
However, some take the view that if Abe announces his decision to 
run in the race, Fukuda would give up his candidacy. 
 
If the anti-Koizumi and Abe forces find Fukuda has decided not to 
run despite their efforts to support him, they may be urged to 
fundamentally review their strategy. Some of them have already 
begun making statements assuming Fukuda might bow out of the 
race. Kato noted, "There is an unexpected cabinet minister who is 
eager to run for the race." As a fifth candidate to counter Abe, 
the name of State Minister for Financial Affairs Yosano has now 
been floated. 
 
(2) 2006 LDP presidential race: Junior members supportive of Abe 
for generational change in party are digging in heels against 
veteran Fukuda, whose supporters are eager to join party 
mainstream 
 
YOMIURI (Page 4) (Abridged) 
May 10, 2006 
 
Following Prime Minister Koizumi's indication that the Mori 
faction would not have to field a single candidate for the LDP 
presidency, opinion is growing in the faction that both Chief 
Cabinet Secretary Shinzo Abe, 51, and former Chief Cabinet 
Secretary Yasuo Fukuda, 69, should both run in the race. Veteran 
 
SIPDIS 
LDP members not belonging to the Mori faction are also eager to 
field Fukuda with the aim of joining the mainstream in the party 
and avoiding a generational change of leadership in the party. 
Junior members, on the other hand, are determined to rally around 
Abe. 
 
LDP Upper House Secretary General Toranosuke Katayama expressed 
understanding yesterday about Abe and Fukuda running in the race, 
telling the press conference, "Factional unity is important to 
many members, but it's difficult to force a decision on all 
members." 
 
Former Secretary General Koichi Kato also noted on a TBS program 
yesterday, "The mentality to produce a single candidate could 
eventually destroy the party." 
 
There exist other views in the party. 
 
A senior Tsushima faction member supportive of Fukuda indicated 
that Fukuda has a chance to defeat the nationally popular Abe, 
noting: "If the Tsushima faction teams up with pro-Fukuda forces 
in the Mori faction and the Yamasaki faction, Fukuda can beat 
Abe. Every faction has to face the Upper House election next 
year, so there is no need to pick someone who will only become a 
 
TOKYO 00002540  004 OF 013 
 
 
'poster boy' for that poll." 
 
The Niwa, Koga, Ibuki, and other factions tilted toward Fukuda 
are planning to join the mainstream by joining forces in the name 
of rebuilding Asia policy. But some members still think that 
Fukuda may not seek the presidency even if former Prime Minister 
Mori gave up the idea of fielding a single candidate, because he 
is not the type of person who comes forward voluntarily. 
 
Meanwhile, a junior Abe supporter predicted: "Mr. Abe will run in 
the race no matter what, setting off a struggle between veteran 
and junior members rather than a fight among factions." 
 
A battle between Abe and Fukuda could split not only the Mori 
faction but also other factions. Executive members of the Ibuki 
and the Niwa-Koga factions are planning to hold a meeting shortly 
to exchange views. 
 
(3) Ozawa ends silence on education, US force realignment 
 
ASAHI (Page 4) (Full) 
May 10, 2006 
 
Since assuming his present post, Minshuto (Democratic Party of 
Japan) President Ichiro Ozawa had not spoken on key policies 
while giving priority to unifying views in his party. But he 
opened up in a press conference yesterday. He stressed the need 
to reflect local identity in education and also criticized the 
government's lack of explanation regarding role-sharing between 
Japan and the US in realigning US forces in Japan. By 
underscoring points of contention, he indicated his determination 
to thoroughly fight the ruling camp in the final stage of the 
current Diet session. 
 
In the remaining Diet session, the focus of discussions will be 
on a bill amending the Fundamental Law of Education. Ozawa had 
refrained from commenting on the bill, only saying: "Unifying 
views in the party is my top priority." In the press conference, 
however, Ozawa lashed out at the government's draft bill that 
included the expression "an attitude that respects our nation and 
homeland," saying: 
 
"Just because such words as 'patriotism' and 'love' are 
mentioned, people do not love the nation in a real sense. It is 
more important to consider how to build a society that can foster 
independent individuals, as well as love for their nation and 
homeland." 
 
Ozawa also touched on education and called for a review of the 
education board system. He said: "It does not stand to reason 
that neither the central government nor local governments take 
responsibility for compulsory education." He added: "The 
government should allow local governments to assert their 
identity and independence more in the contents of education." He 
thus stressed that the focus in educational reform should be on 
reviewing the current centralized system. 
 
The largest opposition party has decided to finalize its own 
proposals to counter the government's draft bill amending the 
Fundamental Law of Education this week. Ozawa's remarks will 
contribute to setting the direction of the party. 
 
Ozawa voluntarily took up the issue of US force realignment at 
 
TOKYO 00002540  005 OF 013 
 
 
the outset of the press conference and said: 
 
"Japan's share is not the problem. The serious problem is that 
the government, while being unable to explain to the people 
Japan's role in national security and future options for role- 
sharing between Japan and the US, is being asked to use taxpayer 
money to pay a share of the realignment cost. I am poised to 
grill the Koizumi government for its stance and conduct a heated 
debate in the final stage of the session." 
 
(4) Kakushin (Matter of Heart) column - Positions of LDP, New 
Komeito, DPJ about constitutional revision far apart over Article 
9 
 
TOKYO SHIMBUN (Page 3) (Almost full) 
May 3, 2006 
 
Hidehiro Honda 
 
The Constitution of Japan will today mark its 59th anniversary. 
The ruling Liberal Democratic Party (LDP) and the opposition 
Democratic Party of Japan (Minshuto or DPJ) put their thoughts 
into shape as "a draft of a new constitution" and "a set of 
proposed amendments to the Constitution" respectively. The New 
Komeito plans to unveil possibly in October its constitutional 
proposals to beef up the current Constitution. Debates on 
constitutional revisions are reaching a turning point. We examine 
the positions of these three parties about constitutional 
revisions. 
 
Basic policy 
 
The LDP is an advocate for rewriting the Constitution. Last 
October, it drafted a new constitution by adding drastic 
revisions to the current Constitution. 
 
Keeping in mind the criticism that the current Constitution was 
imposed by the United States on Japan, the LDP stated in the 
preamble of its draft, "We, the Japanese people, as sovereign and 
based on our will and determination, will establish this 
constitution as a self-imposed one with these words, `We, the 
Japanese people, based on our will and determination, and as 
sovereign, do establish this constitution.'" 
 
The LDP's draft retains the Emperor as the symbol of the state 
and respects the so-called three principles: sovereign power that 
resides with the people, pacifism, and basic human rights. 
Characteristic of the draft is that the prime minister's 
authorities are enhanced in this way: "The prime minister directs 
and supervises all administrative offices and serves as a 
comprehensive coordinator." The draft also eases the requirement 
for constitutional revision from "two-thirds or more" of all the 
members of each house of the Diet to "a majority." 
 
Minshuto, based on its set of proposed amendments to the 
Constitution already released, intends to draft a new 
constitution by the end of next year. In its constitutional 
revisions, it says, "We will boldly establish a future-oriented 
conception of the constitution." 
 
As the basic goals of the new constitution, Minshuto cites 
building a new society in which sovereignty rests with the people 
and remaking Japan into a state conscious of environmental 
 
TOKYO 00002540  006 OF 013 
 
 
conservation and peace-making. 
 
The New Komeito insists that in order to meet the changing times, 
the current Constitution needs to be modified with the addition 
of new provisions. The party plans to unveil a set of new 
proposals in October. According to them, the party will retain 
the current Constitution almost as is but will add new ideas like 
human security, which is meant to protect human life, livelihood, 
and dignity. 
 
Right to self-defense 
 
The three parties' positions are far apart over how to treat 
Article 9, as everyone has expected. 
 
The LDP in its draft keeps the first paragraph of Article 9 as 
is, but it rewrites the second paragraph to stipulate that Japan 
will possess a Self-Defense Military to "ensure the peace and 
independence of the country, as well as the safety of the country 
and its people." The draft does not mention the right to 
collective defense, but the party says Japan can exercise it. It 
also states that Japan should make international contributions to 
secure world peace and safety. 
 
The LDP's draft allows Japan to use armed force abroad but shies 
away from mentioning specifics, noting that the criteria for the 
use of armed force and the sphere of activities using armed force 
will be determined by a Basic Law on Security Affairs and other 
legislation. 
 
Minshuto makes clear Japan's possession of the right to self- 
defense by pointing out the need to review Article 9. It allows 
Japan to take part in UN-led multilateral forces and UN 
peacekeeping operations, but it has yet to draw a conclusion 
about whether to allow Japan to use armed force abroad. 
 
Party President Ichiro Ozawa has indicated that under the current 
Constitution, Japan is allowed to use armed force abroad if Japan 
takes part in activities led by a multinational force organized 
under a UN resolution. 
 
In the recent party presidential race, Ozawa, giving 
consideration to some party members cautious about using armed 
force abroad, adopted softer language, saying, "There is a need 
to establish UN-centered security principles." How the party will 
form a unified view about this matter in the future remains to be 
seen. 
 
The New Komeito states that both paragraphs of Article 9 should 
be kept as is, and it is continuing discussion on whether to 
create a third paragraph to stipulate the existence of the Self- 
Defense Forces (SDF) and international contributions. The party's 
position about the right to collective defense is "not to allow 
Japan to exercise it," according to Akihiro Ota, chair of the 
party's Research Council on the Constitution. 
 
Provisions on duties and obligations 
 
The LDP and Minshuto both add environmental rights, the right to 
privacy, and the rights of crime victims to the current 
Constitution. The New Komeito, as well, will release its 
constitutional proposal dealing with similar rights. 
 
 
TOKYO 00002540  007 OF 013 
 
 
The LDP's draft stipulates "people's responsibilities" thusly: 
"Responsibilities and duties follow freedom and rights." 
Minshuto, emphasizing respect for the dignity of human beings as 
the basis of its policy, stipulates common responsibilities to 
deal with common tasks facing society, such as environmental 
conservation. 
 
The Japanese Communist Party and the Social Democratic Party are 
opposed to constitutional revisions, arguing that it is possible 
to deal with things under the current Constitution without adding 
new rights to it. 
 
(5) Poll: 42% want Constitution's Article 9-1, 9-2 left intact, 
43% want both paragraphs rewritten or amended in part 
 
ASAHI (Page 1) (Abridged) 
May 9, 2006 
 
Prior to May 3 Constitution Day, the Asahi Shimbun conducted a 
nationwide public opinion survey on the Constitution of Japan. In 
the survey, respondents were asked if they thought the nation's 
postwar constitution should be amended on the whole. In response 
to this question, "yes" totaled 55%, leveling off from 56% in 
last year's survey. In the meantime, "no" totaled 32%, likewise 
flat from 33% in the last survey. Respondents were also asked if 
they thought Article 9-1, which renounces war, and Article 9-2, 
which stipulates Japan's maintenance of no war potential, should 
be amended. In response, "no" totaled 42%, with "yes" at 43%. In 
the breakdown of "yes" answers, 18% wanted both paragraphs to be 
amended, with 9% wanting only Article 9-1 to be amended and 16% 
wanting only Article 9-2 to be amended. 
 
The survey was conducted April 15-16 on a face-to-face basis, 
with a total of 3,000 persons sampled out of the nation's voting 
population. 
 
The Diet, in its current session, focuses on a national 
referendum bill to stipulate procedures for amendments to the 
Constitution. In the survey, 53%, or a majority of the nation, 
said there is no need to do so before constitutional revision is 
debated to the full. As seen from the figure, the greater part of 
those polled remained cautious about revising the Constitution. 
In the meantime, the proportion of those thinking it better to do 
so was no more than 32%. 
 
The same question has been asked in the previous surveys since 
1997 about the advisability of constitutional revision. "Yes" 
accounted for 46% in 1997, 47% in 2001, 53% in 2004, 56% in 2005, 
and 55% in the latest one, while "no" respectively accounted for 
39%, 36%, 35%, 33%, and 32%. "Yes" topped 50% in the past three 
surveys. In the latest survey, however, it stopped increasing. 
Those who answered "yes" were further asked if that was because 
they wanted to change Japanese society substantially. In response 
to this question, 38% answered "yes," with 57% saying "no." This 
shows that those in favor of constitutional reform would like to 
have the Constitution meet the present state of Japan, instead of 
hoping to change Japan with constitutional reform. 
 
(6) US consul general: Okinawa's proposed plan for constructing 
temporary helipad "is not sufficient"; Urges quick action to 
construct V-shaped airstrips 
 
YOMIURI (Western Japan version; inside page) (Full) 
 
TOKYO 00002540  008 OF 013 
 
 
May 10, 2006 
 
US Consul General Thomas Reich in Okinawa Prefecture, yesterday 
responded to an exclusive interview with the Yomiuri Shimbun at 
the US Consulate General in the Urasoe City, Okinawa. In the 
interview, when asked about Okinawa Prefecture's recently 
proposed plan to construct a temporary helipad in connection with 
the relocation of the US Marine Corps Futenma Air Station in 
Ginowan City, Reich stated: "That plan differs from what Japan 
and the United States have agreed on. I don't think the two 
governments will modify what they have agreed upon." He was the 
first US government official to express a view about the Okinawa 
prefectural government's proposed plan to construct a temporary 
helipad at a coastal area of Camp Schwab in Nago City. 
 
Reich stated: "The four heads of neighboring municipalities, 
including the mayor of Nago City, have given their approval to 
the relocation of the Futenma airfield to Camp Schwab. The 
Okinawa prefectural government's plan lacks a runway (necessary 
for training), and it does not appear to be a good proposal in 
the eyes of the US government." From the standpoint of 
maintaining deterrence and removing the hazardous nature of the 
Futenma airfield from its neighborhood, he indicated the need to 
quickly construct two V-shaped airstrips on a coastal area of 
Camp Schwab as agreed on between Tokyo and Nago City. 
 
The consul general described the final report on the realignment 
of US forces in Japan the Japanese and US governments had 
recently agreed on as being significant, and underscored: "It 
came out in good shape in terms of strengthening the Japan-US 
alliance and in view of the global situation." Reich himself had 
interviewed heads of municipalities and experts in the prefecture 
over the past two years and found that they have been strongly 
interested in: 1) troop reduction, and 2) an early return of the 
Futenma airfield to Okinawa. Citing these two desires, Reich 
said, "These two things desired by most people will shortly come 
true, so I believe we can obtain understanding from the people of 
Okinawa." 
 
Reich also referred to other relocation plans, for instance, the 
planned transfer of jet fighter training now carried out at 
Kadena Air Base in Kadena Town to somewhere in the Japanese 
mainland and stated: "The transfer plan will bring troops to 
locations where they have never stayed. I hope people in those 
areas will open themselves to US troops and welcome them." 
 
(7) US force realignment settled through defense chiefs' talks; 
"Real water" demonstrates transformed Japan-US alliance 
 
NIHON KEIZAI (Page 2) (Full) 
Evening, May 9, 2006 
 
By Hiroshi Maruya, Washington 
 
A somewhat nostalgic expression cropped up in Japan-US talks on 
US force realignment, which was settled recently. US President 
Ronald Reagan had called it "real money." In his talks with 
Defense Agency Directory General Fukushiro Nukaga, US Defense 
Secretary Donald Rumsfeld referred to it as "pure money." He was 
 
SIPDIS 
talking about "real water," or direct fiscal outlays. The 
emergence of such an expression demonstrated the transformation 
of the Japan-US alliance. 
 
 
TOKYO 00002540  009 OF 013 
 
 
The United States frequently used the expression "real water" in 
seeking greater Japanese demand during the 1980s. Japan also 
often used it in explaining the scale of its economic measures in 
the late 1990s. 
 
During the Gulf War in 1991, Japan decided to extend an 
additional 9 billion dollars to the US-led multinational force 
through talks between Finance Minister Ryutaro Hashimoto and US 
Treasury Secretary Nicholas Brady. In those days, the result- 
oriented America's basic perception was that it had to deal with 
the Finance Ministry and the largest faction in the Liberal 
Democratic Party (which happened to be the Takeshita faction at 
the time) in talks with Japan on any subject involving "money." 
 
Those days are over. Prime Minister Junichiro Koizumi left 
negotiations with Washington on US force realignment, including 
the cost of relocating Okinawa-based Marines to Guam, entirely to 
Nukaga, leaving Washington somewhat apprehensive. But 
Washington's skepticism vanished the moment the Defense Agency 
struck a deal with Nago to construct two runways in a V shape to 
replace Futenma Air Station. 
 
"Nukaga-san, do you have more magic?" 
 
"I will do it." 
 
The conversation took place between US Ambassador to Japan Thomas 
Schieffer, who served as a bridge between Tokyo and the Bush 
administration, and Nukaga at the ambassador's residence in 
Tokyo. Giving a positive assessment of Nukaga's leadership that 
produced results on the deadlocked Futenma relocation issue, the 
US opted to deal with Japan's defense chief, who was not a member 
of the Mori faction, the largest in the LDP. 
 
Rumsfeld, a former CEO of a leading US firm, is severe when it 
comes to figures. Rumsfeld held talks with Nukaga on April 23 in 
which he insisted for the first three hours that Japan bear 75% 
of the cost. Nukaga refused to give in. 
 
After three breaks, Rumsfeld finally said: "It's pointless to 
continue our talks today. I'm willing to go to Tokyo to pick up 
where we left off today." This prompted Nukaga to present a 
compromise plan. They reached an agreement only half an hour 
later. 
 
The political settlement by the two defense chiefs carries 
significance transcending the fiscal realm. 
 
The Foreign Ministry played a central role in reviewing the Japan- 
US security setup in the late 1990s. But the ministry's 
involvement in the force realignment negotiations was minimal, as 
talks centered on technical matters, beginning with military 
operations. 
 
The Japan-US Security Consultative Committee meeting (two-plus- 
two) held on May 1 served as a venue to confirm the agreement 
reached between Nukaga and Rumsfeld. Gone are the days when the 
Self-Defense Forces' "shopping plans" and the interpretation of 
the US-Japan Security Treaty were synonymous with security 
debates. Policy, military operations, and fiscal disbursement are 
becoming a single matter. 
 
The presence of the LDP, the Foreign Ministry, and the Finance 
 
TOKYO 00002540  010 OF 013 
 
 
Ministry playing minor roles in the negotiation process tells 
that the Japan-US alliance has entered the third phase following 
the Cold War and the post-Cold War era. 
 
(8) Japan to reject China's proposal for joint natural gas 
exploration near Senkaku Islands during gas exploration talks to 
be resumed next week 
 
SANKEI (Page 3) (Full) 
May 10, 2006 
 
The government yesterday decided to formally refuse China's 
proposal made during the senior level talks of Japanese and 
Chinese officials for joint gas exploration in waters around the 
Senkaku Islands, which are Japan's territory. Japan will announce 
this decision to China during senior level talks of the two 
countries to be resumed in Tokyo next week. In the talks, Japan 
will again urge China to accept Japan's joint natural resource 
development proposal covering four oil and gas fields around the 
median line, which has already been presented to China. 
Negotiations, however, are certain to take much time to be 
finalized. 
 
In the last senior level talks of Japanese and Chinese officials 
held in Beijing March 6-7, China proposed a joint development in 
two water areas: one that is on the northern side of the Senkaku 
Islands and is close to Japan's territory and within its 
exclusive economic zone (EEZ), and the other that is on the 
northern side of the Asunaro (Longjing in Chinese) oil and gas 
field adjacent to the Japan-South Korea joint continental shelf 
development zone and is within Japan's waters from the median 
line. 
 
According to a senior Foreign Ministry official, there is the 
concern in the government that "China, which claims the Senkaku 
Islands, is apparently using a gas and oil joint development 
proposal to shift attention away from the territory issue." There 
was also an objection in Japan to China's proposal for joint 
development on the Japan-South Korea joint continental shelf 
development zone, with a Foreign Ministry official arguing: "The 
proposal includes only the sea area on the Japanese side from the 
median line." 
 
In the talks of senior officials from Japan and China held in 
Tokyo last fall, the government proposed jointly developing four 
gas and oil fields - Shirakaba (or Chunxiao in Chinese), Kashi 
(or Tianwaitian), Kusunoki (or Duanqiao), and Asunaro (or 
Longjiang) - and presented a joint development project aimed at 
investing in, for instance, mining facilities already constructed 
by China and urged China to stop its oil and gas exploration now 
being carried out in waters around the median line, but China 
rejected Japan's proposal. 
 
China has already set in motion production in Kashi and has 
Shirakaba ready to begin production. Its Pinghu oil and gas 
field, about 70 kilometers away from the Japan-China median line 
and within China's waters, provides oil and natural gas to such 
areas as Shanghai via undersea pipelines. In preparation for 
increasing demands, China is expanding this oil and gas field and 
installed a new mining facility in it in mid-March. There is even 
an observation that China will soon start mining works in the 
Shaoxing oil and gas field located in the water area dozens 
kilometers north from that field. 
 
TOKYO 00002540  011 OF 013 
 
 
 
In Japan, the government has granted the gas exploration rights 
to Teikoku Oil Co., Ltd., but the firm has yet to decide to 
launch gas exploration and it instead intends to continue 
negotiations with China. As it stands, the fear now emerging in 
Japan is that the East China Sea will literally become the sea of 
China, given that a number of Chinese mining facilities will be 
built there and thereby apparently allowing China to determine 
the fate of Japan's lifeline sea lanes. 
 
(9) Leading Japanese, European manufacturers to develop Indian 
market, based in ASEAN, using FTAs and production facilities 
there 
 
NIHON KEIZAI (Top Play) (Excerpts) 
Evening, May 10, 2006 
 
(Singapore, Reporter Kiyoshi Noma: Bangkok, Reporter Hisatsugu 
Nagao) 
 
Leading manufacturers of Japan, South Korea and Europe have begun 
using member nations of the Association of Southeast Asian 
Nations (ASEAN) as bases for exports to India. This is because 
ASEAN member nations can now exports goods to India at low tariff 
rates because of a free trade agreement (FTA) they have signed 
with that nation. Some companies have started expanding their 
export bases in Singapore. Southeast Asia has originally strong 
ties with Japan, the US and China, but now it will likely speed 
up efforts to construct export bases with an eye on the Indian 
market. 
 
Toshiba began exporting refrigerators and washing machines 
manufactured at its plant in Thailand to India. It is now looking 
into the possibility of exporting electric rice cookers to that 
nation. Matsushita Electric Industrial Co. is exporting Braun 
tubes to India from Thailand. NEC began full-scale exports of 
semi-conductors manufactured in Singapore from 2005. 
 
South Korea's Samsung Electronics is supplying microwave ovens 
made in Thailand to the Indian market. The TCL Group, China's 
leading electric appliance manufacturer, has characterized 
exports of CRT-based televisions to India as a key agenda item, 
as President Ceng Chun-xin of its Thailand-based affiliate put 
it. 
 
Novartis, a prominent Swiss pharmaceutical company, plans to 
export pharmaceutical products produced in Singapore to the 
Indian market as early as 2008. It is now constructing a plant in 
Singapore to manufacture medicines for high blood pressure and 
cardiac diseases, by investing approximately 180 billion dollars. 
 
One reason for those companies have chosen Southeast Asia as 
their bases for exports to the Indian market is that they have 
multilevel production facilities starting from the manufacturing 
of parts to assembly due to investments made by Japanese, 
European and US companies over the past two decades. Since China 
is now beginning to serve as a plant for the world, many 
companies in Southeast Asia have spare productive capacity. These 
plants aim to raise their operation rates. 
 
FTAs are also a major factor for those company having chosen 
ASEAN. Thailand and India scrapped tariffs on 82 items as an 
early implementation measure in September 2004. Singapore and 
 
TOKYO 00002540  012 OF 013 
 
 
India had an economic partnership agreements (EPA) put into 
effect in August 2005. Tariffs on refrigerators and Braun tubes 
will be scrapped over four years, starting with a 10% cut. 
 
The moves are beginning to produce results. Since last October 
Sony has exported CRT-based televisions that lay emphasis on low 
pitch sound to India. It has sold more than 40,000 sets over six 
months. It produces Braun tubes in Singapore and assembles them 
into finished products for exports to India at its Thai plants. 
The destination of approximately 60% of Sony's CRT-based 
televisions is India. 
 
(10) Income survey; Widening disparity in 30-49 age bracket; Gini 
coefficient rose 30% between 1987 and 2002 
 
TOKYO SHIMBUN (Page 1) (Slightly abridged) 
May 9, 2006 
 
Research conducted at the National Social Security and Population 
Issue Research Center, whose director is Yoshihiro Kaneko, 
discovered on May 7 that the Gini coefficient ASTERISK  for men 
and women in the 30-49 age bracket has risen about 30% over a 15- 
year period ending in 2002. The research re-calculated data 
collected in income distribution surveys by the Ministry of 
Health, Labor and Welfare (MHLW). 
 
Income disparity widened among elderly people aged over 60. 
Though the disparity in this age bracket was substantially 
narrowed in terms of redistributed income added with pensions, no 
such improvement was seen among those in the 30-49 age brackets 
even after tax cuts and social security benefits are taken into 
account. It has been pointed out that disparity among working 
generations could further widen in the future. How to deal with 
the widening income disparity will likely become a domestic 
issue. 
 
Concerning income disparity, the Cabinet Office released this 
view in January: "Income disparity has seemingly widened due to 
an increase in elderly households. It is not possible to 
determine the actual widening of disparity from statistics." The 
MHLW has pointed out the widening wage disparity in the outline 
of the 2006 Labor and Economy White Paper, showing differences in 
the perception of the present state among government officials. 
 
The center re-calculated data obtained through income 
redistribution surveys carried out in 1987, 1993 and 2002 and 
compared the statistics by gender, age, using5-year increments, 
and income brackets. The MHLW carries out such a survey every 
three years and release the results, after tallying data by 
household. 
 
The comparison found that in terms of before tax income that does 
not include social security benefits, the Gini coefficient for 
men aged between 30 and 49 rose 10.2-29.6% and that for women 
aged between 30 and 44 rose 9.8-23.3%. The Gini coefficient for 
men aged between 35 and 39 jumped 29.6%. The disparity markedly 
widened among both men and women since 1993, the year when the 
bubble economy burst. 
 
Those of men aged over 65 and women aged over 60 also increased, 
but pension benefits improved their income disparity. 
 
 ASTERISK (TN: for a definition, see: 
 
TOKYO 00002540  013 OF 013 
 
 
http://en.wikipedia.org/wiki/Gini coefficient) 
 
(Corrected copy) Construction of Futenma alternative facility 
will cost over 300 billion yen, 100 billion yen less expensive 
than Henoko offshore plan 
 
YOMIURI (Page 1) (Excerpts) 
May 10, 2006 
 
An outline of the plan to build an alternative facility for the 
US Marine Corps' Futenma Air Station at the coastline of Camp 
Schwab in Nago, Okinawa Prefecture, became clear yesterday. The 
facility will occupy a total space of 180 hectares. Of it, about 
20% will be built on the land portion of the base with the 
remaining 80% on reclaimed land. The alternative facility is 
expected to be completed by 2014 at a cost of 300 to 350 billion 
yen -- l00 billion yen less than the previous Henoko offshore 
plan. The government plans to determine the plan in detail by the 
summer based on talks with the Okinawa and Nago municipal 
governments to begin environment assessment procedures in the 
fall. 
 
The US force realignment final report, released on May 1, 
specified the construction of two runways in a V shape measuring 
1,600 meters each and 1,800 meters in total including the 
overruns. 
 
It also became clear that reclamation would cost 200 billion yen 
and that the construction of such facilities as the runways, 
apron, aircraft hanger, and the relocation of existing facilities 
from Camp Schwab to the training range would come to over 200 
billion yen. 
 
SCHIEFFER