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UNCLAS SECTION 01 OF 14 TOKYO 002662 
 
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 05/15/06 
 
INDEX: 
 
(1) Poll on Koizumi cabinet, political parties 
 
(2) Poll on Constitution 
 
(3) Government, ruling parties waiting to see how US 
congressman's concern expressed about prime minister's Yasukuni 
visit will develop; Some speculate Yasukuni issue likely to be 
major issue in the presidential election campaign this fall 
 
(4) Yasukuni issue: LDP's Koga, chairman of the bereaved families 
association, proposes giving consideration to separating Class-A 
war criminals from rest of war dead 
 
(5) Cabinet approval for US force realignment plans: Prime 
Minister Koizumi: "No need to hurry. It would be fine if cabinet 
approval obtained by late June" 
 
(6) US Consul General Reich: Rejects possibility of heliport 
construction at Futenma alternate facility; MCAS Futenma will be 
in use until 2014 
 
(7) UN contributions: Government may defer paying contributions, 
determined to press Annan for breakthrough in reform plans 
 
(8) Gov't mulls expanding economic aid to Iraq 
 
(9) Government to establish "highly skilled workers" framework 
for foreign workers; Ministries, agencies also looking for ways 
to stem expansion 
 
(10) Yuko Kawamoto, professor at Waseda University Graduate 
School, calls for reestablishment of financial discipline in run- 
up to removal of near-zero-interest-rate policy; Lessons Japanese 
economy has learned from the past to be brought into question 
ARTICLES: 
 
(1) Poll on Koizumi cabinet, political parties 
 
NIHON KEIZAI (Page 2) (Full) 
May 15, 2006 
 
Questions & Answers 
(Figures shown in percentage. Parentheses denote findings from 
the last survey in March.) 
 
Q: Do you support the Koizumi cabinet? 
 
Yes                                      49       (48) 
No                                       39       (40) 
Can't say (C/S) + don't know (D/K)       12       (12) 
 
Q: Which political party do you support or like now? 
 
Liberal Democratic Party (LDP)                    44       (44) 
Democratic Party of Japan (DPJ or Minshuto)       24       (19) 
New Komeito (NK)                                   5        (3) 
Japanese Communist Party (JCP)                     2        (4) 
Social Democratic Party (SDP or Shaminto)          2        (3) 
People's New Party (PNP or Kokumin Shinto)         0        (0) 
New Party Nippon (NPN or Shinto Nippon)            0        (0) 
Other political parties                            1        (1) 
 
TOKYO 00002662  002 OF 014 
 
 
None                                              18       (21) 
C/S+D/K                                            5        (5) 
 
Polling methodology: The survey was taken May 12-14 by Nikkei 
Research Inc. over the telephone on a random digit dialing (RDD) 
basis. For the survey, samples were chosen from among males and 
females, aged 20 and over, across the nation. A total of 1,499 
households with one or more voters were sampled, and answers were 
obtained from 867 persons (57.8%). 
 
(2) Poll on Constitution 
 
ASAHI (Page 10) (Full) 
May 3, 2006 
 
Questions & Answers 
(Figures shown in percentage, rounded off. Bracketed figures 
denote proportions to all respondents. Parentheses denote the 
results of a previous survey conducted in April 2005 unless 
otherwise specified.) 
 
Q: Which political party do you support now? 
 
Liberal Democratic Party (LDP)                    36 
Democratic Party of Japan (DPJ or Minshuto)       15 
New Komeito (NK)                                   3 
Japanese Communist Party (JCP)                     2 
Social Democratic Party (SDP or Shaminto)          1 
People's New Party (PNP or Kokumin Shinto)         0 
New Party Nippon (NPN or Shinto Nippon)            0 
Liberal League (LL or Jiyu Rengo)                  0 
Other political parties                            1 
None                                              37 
No answer (N/A) + don't know (D/K)                 5 
 
Q: Are you aware of the Constitution in your daily life, or do 
you think about it? (One choice only) 
 
Often                           6        (6) 
Sometimes                      34       (37) 
Not very often                 43       (44) 
Not at all                     17       (12) 
Other answers (O/A) + N/A       0        (1) 
 
Q: How much do you know about the Constitution? 
 
Very well       4 
Somewhat       43 
Little         52 
O/A+N/A         1 
 
Q: The Diet and political parties are debating the advisability 
of amending the Constitution. To what extent are you interested 
in the issue of constitutional revision? (One choice only) 
 
Very interested            16       (14) 
Somewhat interested        49       (51) 
Not very interested        27       (27) 
Not interested at all       7        (6) 
O/A+N/A                     1        (2) 
 
Q: Article 9 in the Constitution consists of two paragraphs that 
declare Japan's war renunciation and its maintenance of no war 
 
TOKYO 00002662  003 OF 014 
 
 
potential. To what extent do you think this article has helped 
with Japan's peace and prosperity? (One choice only) 
 
Very much            25 
Somewhat             49 
Not very much        18 
Not at all            2 
O/A+N/A               6 
 
Q: The Constitution describes nothing about the Self-Defense 
Forces. The government, in its constitutional interpretation, has 
so far taken the position that the SDF does not fall under the 
status of "land, sea, and air forces, as well as other war 
potential" in Article 9-2. Do you think it was good? 
 
Yes           42 
No            40 
O/A+N/A       18 
 
Q: Do you think the Constitution should be amended to expressly 
stipulate the SDF's existence? 
 
Yes           62 
No            28 
O/A+N/A       10 
 
Q: (Only for those who answered "yes") What do you think is the 
best way to expressly stipulate the SDF's existence? (One choice 
only) 
 
Rewrite Article 9-1 or Article9-2 
             31       (19) 
Leave Article 9's provisions intact and add a new provision 
             64       (40) 
O/A+N/A       5        (3) 
 
Q: (Only for those who answered "yes") Are you in favor of 
defining the SDF as a military entity? 
 
Yes          38       (23) 
No           54       (34) 
O/A+N/A       8        (5) 
 
Q: (Only for those who answered "no") What do you think should be 
done about the SDF? (One choice only) 
 
Maintain its current status       66       (18) 
Downscale                         27        (8) 
Abolish                            4        (1) 
O/A+N/A                            3        (1) 
 
Q: The Diet and political parties are debating problems about the 
right of collective self-defense over the Japan-US Security 
Treaty and the SDF's overseas activities. The right of collective 
self-defense is that if and when an ally or its armed forces are 
attacked, Japan will regard the attack as an attack against Japan 
and will fight with the ally against the enemy, even though Japan 
is not attacked. The government's interpretation is that Japan 
has the right but is not allowed to use the right according to 
Article 9 in the Constitution. What do you think about the right 
of collective self-defense? (One choice only) 
 
Japan should continue its prohibition against the right of 
 
TOKYO 00002662  004 OF 014 
 
 
collective self-defense                             53 
Japan should be allowed to use the right of collective self- 
defense                                             36 
O/A+N/A                                             11 
 
Q: What do you think should be done about the SDF's overseas 
activities from now on? (One choice only) 
 
The SDF should not be engaged in any overseas activities 
                                            11        (8) 
The SDF should be allowed to participate in United Nations 
peacekeeping operations like those in Cambodia 
                                            46       (45) 
The SDF should be allowed to help disputed countries like Iraq 
with their nation-rebuilding efforts        22       (27) 
The SDF should be allowed to use armed force if the SDF needs to 
do so in Japan's national interests         15       (15) 
O/A+N/A                                      6        (5) 
 
Q: What do you think about amending Article 9 in the 
Constitution? (One choice only) 
 
Leave both paragraphs intact            42 
Rewrite the first paragraph only         9 
Rewrite the second paragraph only       16 
Rewrite both paragraphs                 18 
O/A+N/A                                 15 
 
Q: Which opinion is closest to yours about the emperor system? 
(One choice only. Parentheses denote the results of a survey 
conducted in 2004.) 
 
Define the emperor as Japan's head of state         4        (4) 
The emperor should remain a symbol                 84       (83) 
The emperor system should be abolished             10       (10) 
O/A+N/A                                             2       (3) 
 
Q: Do you think the Constitution should be amended? 
 
Yes           55       (56) 
No            32       (33) 
O/A+N/A       13       (11) 
 
Q: (Only for those who answered "yes") Why? (One choice only) 
 
Because new rights and systems should be incorporated       38 
(21) 
Because it's better to incorporate more of the people's 
obligations                                     17        (9) 
Because there are problems about Article 9       9        (5) 
Because the Constitution has never been revised since its 
establishment                                   13        (7) 
Because we want to create a new constitution of our own, instead 
of the current postwar constitution the US imposed on Japan 
                                                21       (11) 
O/A+N/A                                          2       (2) 
 
Q: (Only for those who answered "yes") Do you think it is 
urgently necessary to amend the Constitution? 
 
Yes          56       (31) 
No           39       (21) 
O/A+N/A       5        (3) 
 
TOKYO 00002662  005 OF 014 
 
 
 
Q: (Only for those who answered "yes") Is that because you would 
like Japan to change substantially? 
 
Yes           38       (21) 
No            57       (31) 
O/A+N/A        5        (3) 
 
Q: (Only for those who answered "no") Why? (One choice only) 
 
Because the Constitution helps guarantee freedom and rights 
                                                   17        (5) 
Because the Constitution has taken root in the nation 
                                                   21       (10) 
Because Article 9 may be rewritten                 17        (6) 
Because the people's obligations will likely be heavier 
                                                    6        (2) 
Because there's no need to revise the Constitution though it has 
some problems                                      23        (7) 
O/A+N/A                                             6        (2) 
 
Q: Amendments to the Constitution require the affirmative vote of 
a majority of all voters through a national referendum. However, 
Japan still does not have a law that stipulates procedures for 
it. What do you think about legislation for a national 
referendum? (One choice only) 
 
It would be better to establish the law at an early date because 
it is necessary to go through such procedures                32 
There's no need to establish the law because the Diet has yet to 
fully debate whether to revise the Constitution              53 
The law should not be established because it will lead to 
constitutional revision                                       8 
O/A+N/A                                                       7 
 
Q: Do you think it would be all right to let Dietmembers debate 
the issue of constitutional revision? 
 
Yes          22 
No           72 
O/A+N/A       6 
 
Q: Would you like to take part in the discussion of 
constitutional revision? 
 
Yes          43 
No           49 
O/A+N/A       8 
 
Polling methodology: The survey was conducted April 15-16 on a 
face-to-face basis along with a survey of public attitudes over 
war responsibility. A total of 3,000 persons were chosen from 
among the nation's voting population on a stratified two-stage 
random-sampling basis. Valid answers were obtained from 1,730 
persons (58%). In the breakdown of respondents, males accounted 
for 47% and females at 53%. 
 
(3) Government, ruling parties waiting to see how US 
congressman's concern expressed about prime minister's Yasukuni 
visit will develop; Some speculate Yasukuni issue likely to be 
major issue in the presidential election campaign this fall 
 
ASAHI (Page 2) (Full) 
 
TOKYO 00002662  006 OF 014 
 
 
May 14, 2006 
 
A senior member of the US Congress has expressed concern about 
Prime Minister Koizumi's visits to Yasukuni Shrine. Japanese 
government and ruling coalition officials are taking this message 
quietly, with one aide to the prime minister remarking: "Only one 
person at present has spoken out." A senior Foreign Ministry 
official emphasized that the Bush administration has never 
indicated any intention to meddle in the Yasukuni issue. In the 
ruling Liberal Democratic Party (LDP), as well, many take the 
view that it will not have an immediate effect on the Japan-US 
alliance. But some in the party have begun speculating that it 
will give impetus to the tendency of making the Yasukuni issue 
and Asia diplomacy major issues in the upcoming LDP presidential 
election campaign in September. 
 
The congressional concern was revealed in a letter sent by Henry 
Hyde, chairman of the US House Committee on International Affairs 
to Speaker of the House of Representatives Dennis Hastert. The 
letter urged Prime Minister Koizumi to make clear he will not 
visit Yasukuni Shrine if he wishes to address the Congress during 
his planned visit to the United States in late June. 
 
A Japanese government official gave this analysis yesterday: 
"Such a comment doesn't represent American public opinion. The 
relationship between President Bush and Prime Minister Koizumi is 
in good shape. The prime minister's speech before Congress could 
give rise to applause but it will never be something despised." 
So far, Koizumi has explained in his Diet replies: "The true 
intention of my shrine visits is understood among US government 
officials." 
 
One foreign policy expert in the LDP yesterday commented: "The 
House speaker is unlikely to stand in the way of the prime 
minister's desire to address the Congress." Several Japanese 
government officials, pointing out that the prime minister's 
itinerary for his US tour has yet to be fixed, rejected as 
speculation the rumor that the Japanese government was sounding 
out the US government about the prime minister addressing the US 
Congress. 
 
The number of Japan experts in the US critical of the prime 
minister's Yasukuni visits has been on the increase. Their 
primary concern is that the fallout from reactions in China and 
South Korea to such shrine visits may destabilize Asia. They fear 
that such visits could lead to conflict between Japan and the US 
over perceptions of the past war. 
 
A senior Foreign Ministry official, however, said firmly: "The US 
government has no intention of poking its nose into the Yasukuni 
issue." LDP lawmakers who traveled to the US earlier this month 
said although White House and Department of State officials, as 
well as members of the Congress, all brought up the Yasukuni 
issue, they did so only because they thought "it would not be 
wise for Japan and China to heighten tensions between them." 
 
However, former LDP Secretary General Koichi Kato said yesterday: 
"The logic of the so-called 'Koizumi diplomacy' is that having 
good relations with the US ensures good relations with other 
countries, but Koizumi now has been hit from behind by the US. He 
has made a diplomatic blunder." 
 
Another LDP lawmaker remarked, "Just because other countries tell 
 
TOKYO 00002662  007 OF 014 
 
 
us to do so, we should change our stance: that trend will 
continue." He then added, "Because of this, the Yasukuni issue 
will likely be on the list of campaign issues in the LDP 
presidential race." 
 
(4) Yasukuni issue: LDP's Koga, chairman of the bereaved families 
association, proposes giving consideration to separating Class-A 
war criminals from rest of war dead 
 
TOKYO (Page 3) (Full) 
May 13, 2006 
 
It was learned on May 12 that former Liberal Democratic Party 
(LDP) Secretary General Makoto Koga, who is also the chairman of 
the Nippon Izokukai or association of the bereaved families of 
the nation's war dead, has urged as a policy proposal for the LDP 
presidential election campaign in September that the separation 
of Class-A war criminals enshrined at Yasukuni Shrine be "subject 
to consideration." The reason for such would be in order to find 
a breakthrough in Japan's relations with China and South Korea 
that have been strained by Prime Minister Junichiro Koizumi's 
visits to that shrine.  Yasukuni Shrine has strongly rejected 
such a separation. Views within the bereaved families association 
also are split into pros and con, but given Koga's strong 
influence in the association, his bringing up the issue of 
separation is likely to spark debate within and outside the 
organization. 
 
The proposal will be vetted during the compilation of a policy 
platform in June by the Niwa-Koga faction, of which Koga is co- 
chairman.  Although Koga, as chairman of the Izokukai, has taken 
a position of urging the prime minister to pay homage at 
Yasukuni, the proposal is generally critical of such visits to 
Yasukuni by Prime Minister Koizumi. It points out: "Relations 
with China have become strained to the extent that summit 
exchanges have been frozen, and a sense that Japan's diplomacy 
has reached an impasse is rapidly building." 
 
In addition, the proposal clearly states: "Views are split within 
Japan and abroad over whether all the souls of the war dead 
should be made subject (to enshrinement (at Yasukuni)). In order 
to make it possible for many more people, including foreigners, 
to pay homage (to the war dead at Yasukuni), the possibility of 
separating some of the souls of those who did not die in battle 
should be made subject of consideration." 
 
Regarding the treatment of Class-A war criminals, the Izokukai 
takes the position based on the principle of the separation of 
state and religion that: "this is a judgment that should be made 
by Yasukuni Shrine, and politics should not intervene."  However, 
China and the Republic of Korea are criticizing the Prime 
Minister's Yasukuni visits because Class-A war criminals are 
jointly enshrined there. Koga's view is that the cause of China 
and South Korea's objections must be removed. 
 
(5) Cabinet approval for US force realignment plans: Prime 
Minister Koizumi: "No need to hurry. It would be fine if cabinet 
approval obtained by late June" 
 
TOKYO SHIMBUN (Page 2) (Full) 
May 13, 2006 
 
Prime Minister Junichiro Koizumi met late yesterday with Defense 
 
TOKYO 00002662  008 OF 014 
 
 
Agency (JDA) Director-General Fukushiro Nukaga and senior ruling 
coalition members to exchange views on plans for the realignment 
of US forces in Japan. Although the government is gearing up to 
obtain by early next week if possible cabinet approval for 
matters relating to US force realignment plan, Koizumi said, 
"There's no need to hurry. It would be fine if cabinet approval 
were obtained by the time of the Japan-US summit meeting (slated 
for late June) is held." 
 
Cabinet approval will confirm the government's policy for 
implementing the realignment plan contained in the final report 
agreed to by Japan and the United States. In the meeting 
yesterday, the participants agreed to stipulate in the cabinet 
decision the government's intention to enhance efforts to develop 
the northern part of Okinawa Prefecture, including Nago City, 
where the US Marine Corps' Futenma Air Station is to be relocated 
from Ginowan City. 
 
(6) US Consul General Reich: Rejects possibility of heliport 
construction at Futenma alternate facility; MCAS Futenma will be 
in use until 2014 
 
RYUKYU SHIMPO (Page 1) (Abridged) 
May 12, 2006 
 
With the signing of a final agreement between Japan and the 
United States on the realignment of US forces in Japan, Thomas 
Reich, consul general at the US Consulate in Okinawa, responded 
to an interview request from this newspaper. In it, he denied the 
possibility of implementing a plan for a temporary heliport, as 
requested of the central government by Okinawa Prefecture. Reich 
noted: "The US and Japan agreed to a plan that has a V-shaped 
runway; it does not include a heliport." He also stressed that 
until the runway is completed by 2014, as planned, Futenma Air 
Station would continue to be used. "The agreement reached between 
the US and Japanese governments on finding a means to eliminate 
the danger of Futenma involves the construction of a new 
alternate facility as quickly as possible." This is the first 
time for the US government to formally reject the construction of 
a heliport (at the Nago site). 
 
He also gave his impression of the memorandum of confirmation 
signed by Okinawa Governor Keiichi Inamine and Defense Agency 
Director General Fukushiro Nukaga: "The governor signaled that 
there has been visible progress in the reduction of the burden on 
Okinawa and that he is cooperating with the central government. 
This is good news for the people of Okinawa, don't you think?" 
 
Answering the objections of the City of Nago to the length of the 
runway on the planned new alternate facility for Futenma, he 
stated: "There will be no change in the length of the runway; the 
length of the runway must be 1,800 meters." 
 
Asked about the elimination of the danger of Futenma Air Station 
prior to the completion of the alternate facility, Reich 
stressed: "We realize it will take time (until the alternate 
facility if built). During that time, although various aircraft 
will continue to fly over Futenma, they will fly overhead, 
observing the same safety measures as before. The best way to end 
the flights is to complete the alternate facility quickly. 
 
(7) UN contributions: Government may defer paying contributions, 
determined to press Annan for breakthrough in reform plans 
 
TOKYO 00002662  009 OF 014 
 
 
 
SANKEI (Page 3) (Abridged slightly) 
May 15, 2006 
 
Japan is likely to put off its financial contributions to the 
United Nations in the event talks on the scale of assessment of 
member states for the period starting 2007 fail to reach a 
conclusion before the end of this year. UN reform plans produced 
by a number of countries, such as Japan and the United States, 
have drawn objections from China and Russia. There is a 
possibility that the UN Committee on Contributions will begin 
talks in June before a decision is made on reform plans. The 
government plans to urge UN Secretary General Kofi Annan, who is 
scheduled to arrive in Japan tomorrow, to display strong 
leadership in producing a conclusion at the upcoming talks. 
 
This year the dues of member states will be assessed, something 
that occurs every three years. Japan presented to the UN General 
Assembly Fifth Committee a plan to set the floor for permanent UN 
Security Council members at 3% or 5% of the total. The United 
States has also come up with a scheme to determine each country's 
share based on GNP calculated according to purchasing power 
parity. Altogether, eight reform plans have been tabled. 
 
Currently, Japan's share is 19.5%,  the second largest following 
America's 22.0%. Japan's share is greater than the remaining four 
permanent UNSC -- Britain, France, China, and Russia -- combined 
(15.3%). 
 
Japan's bid for a permanent UNSC seat last year ended in failure 
due partly to China's maneuvering. There are growing calls in the 
government for permanent members with special privileges to make 
financial contributions befitting their status. Based on this 
view, Japan presented a plan to markedly increase the shares of 
China and Russia. 
 
During the period between 1971 and 1979, China contributed 4.0% 
to 5.5% of the total, and the Soviet Union 11.33% to 14.18%. "In 
view of their past contributions, there is every reason to seek 
greater contributions of China and Russia," a Foreign Ministry 
source said. 
 
It is customary for the Fifth Committee to pass a resolution to 
order the Contributions Committee to calculate member states' 
contributions based on reform plans presented by member countries 
and for the Contributions Committee to report the results back to 
the Fifth Committee before discussing calculation methods. But 
the Fifth Committee has been unable to pass a resolution due to 
strong opposition from China and Russia. 
 
The Contributions Committee will meet in June even if the Fifth 
Committee fails to pass a resolution. "The Fifth Committee has 
never failed to pass a resolution; how the Contributions 
Committee will conduct discussion is totally unpredictable," a UN 
source noted. 
 
Usually the UN General Assembly begins discussion on specific 
ways to reform the scale of assessment of member states in late 
September following the Fifth Committee's discussion of 
calculation methods to reach a conclusion in late December. 
Customarily a decision is made unanimously on new shares of 
financial contributions of member states. Fiscal 2007 may roll in 
before a decision is made on the new scale of assessment of 
 
TOKYO 00002662  010 OF 014 
 
 
member states. 
 
In such a case, the government will have to defer paying Japan's 
financial contributions. 
 
Current shares and projected shares (in %) 
 
       Current       Floor at 3%       Floor at 5%       US plan 
Japan     19.5              15.7              14.8           7.2 
US        22.0              22.0              22.0          21.5 
UK         6.1               6.6               6.2           3.5 
France     6.0               6.1               5.8           3.3 
China      2.1               3.0               5.0          13.0 
Russia     1.1               3.0               5.0           2.5 
 
(8) Gov't mulls expanding economic aid to Iraq 
 
NIHON KEIZAI (Page 2) (Abridged) 
May 13, 2006 
 
Japan will prepare an additional aid package for Iraq, which will 
shortly launch a permanent government. The government has already 
announced an Iraq aid plan that features yen loans totaling 
approximately 76.5 billion yen. In addition, the government is 
also considering another package of financial aid to Iraq. Prime 
Minister Junichiro Koizumi will call Iraq's Prime Minister- 
designate Maliki after his cabinet is inaugurated to tell him 
about Japan's new aid plan. Japan currently deploys Ground Self- 
Defense Force troops in Iraq. After their pullout of Iraq, Japan 
will instead expand the scope of Air Self-Defense Force 
activities in that country. The ASDF will therefore strengthen 
the equipment of its transport planes. The government is also 
planning to send a special envoy to Iraq, if the political 
situation in that country permits, in order to find out what kind 
of assistance the Iraqi government needs. 
 
Japan has suspended its yen loans to Iraq since 1985. In 
February, however, the government announced a plan to resume its 
loan aid to Iraq. In concrete terms, the government has pledged 
to cooperate on three projects, such as renovating berth 
facilities at the southern Iraqi port of Umm Qasr and irrigating 
land around the country. After the Iraqi government takes office, 
Koizumi will tell Iraq that Japan will consider additional aid to 
Iraq for its reconstruction. The prime minister is expected to 
show a plan to expand Japan's financial assistance, envisioning 
the pullout of GSDF troops. 
 
The ASDF, currently stationing its troops at Ali Al Salem Air 
Base in Kuwait, airlifts supplies to Taril Airport for the 
detachment of GSDF troops deployed in the southern Iraqi city of 
Samawah. The government has plans to expand the scope of ASDF 
airlift missions as far as Baghdad. The ASDF will equip its C-130 
transports with a traffic collision avoidance system, or TCAS for 
short. The skies over Baghdad are overcrowded with US military 
and multinational force helicopters, so the government deemed it 
necessary to equip ASDF C-130s with TCAS. The government would 
like to recall the GSDF troops along with the pullout of Samawah- 
based British and Australian security troops. 
 
(9) Government to establish "highly skilled workers" framework 
for foreign workers; Ministries, agencies also looking for ways 
to stem expansion 
 
 
TOKYO 00002662  011 OF 014 
 
 
ASAHI (Page 2) (Abridged) 
May 15, 2006 
 
The government has begun considering adding a "highly skilled 
worker" framework to the general manufacturing sector for 
accepting more foreign workers. The aim is to expand the existing 
framework while stemming the growing acceptance of foreign 
workers to a certain extent. The government plans to incorporate 
the new category in the "big-boned policy guidelines" to be 
produced in June by the Council on Economic and Fiscal Policy 
(CEFP). Fierce maneuvering is likely to occur between the CEFP 
private-sector members eager to expand the framework for foreign 
workers and government offices reluctant to open up the door any 
further. 
 
The CEFP discussed the approach as a means to increase Japan's 
international competitiveness. To reflect government offices' 
view, senior vice ministers of concerned offices, such as the 
Health, Labor and Welfare Ministry and the Justice Ministry, also 
discussed the matter since March and confirmed the policy course 
in April not to accept unskilled foreign workers. In the May 11 
meeting, they discussed the definition and the scope of "highly 
skilled workers," as proposed by the Economy, Trade and Industry, 
and decided to study sectors that can accept such workers. 
 
The government has granted residence status only to aliens with 
special skills, such as chefs who cook foreign foods. The 
category of "highly skilled workers" will expand residence status 
to include the general manufacturing sector. 
 
The economic community has been eager to accept more foreign 
workers, while ministries and agencies have been reluctant to do 
so for fear of an adverse effect on employment and security. 
 
The four private sector CEFP members -- two business leaders and 
two economists -- insisted on the need to accept more foreign 
workers for enhancing Japan's international competitiveness. They 
are aiming for relaxed requirements for residence status and 
expanded acceptance of foreign workers outside traditional areas, 
such as nursing care. 
 
The Health, Labor and Welfare Ministry opposed expanding the 
framework for accepting nursing care providers. The four private- 
sector CEFP members proposed getting help from foreign workers to 
make up for declining labor force. Health, Labor and Welfare 
Minister Jiro Kawasaki rebutted, "We should first consider 
employing a large number of young Japanese men and women (out of 
work)." 
 
Prime Minister Junichiro Koizumi, chair of the CEFP, holds a 
positive view about accepting more foreign workers, but he is 
also reluctant to open the door fully. 
 
(10) Yuko Kawamoto, professor at Waseda University Graduate 
School, calls for reestablishment of financial discipline in run- 
up to removal of near-zero-interest-rate policy; Lessons Japanese 
economy has learned from the past to be brought into question 
 
SANKEI (Page 11) (Full) 
May 12, 2006 
 
Meaning of normalization should be understood 
 
 
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The Bank of Japan (BOJ), the watchdog of the financial market, is 
expected to change its present zero-interest-rate policy by the 
early fall. 
 
The zero-interest-rate policy is intended to settle the non- 
performing loan issue that has stemmed from the bursting of the 
bubble economy and to prop up the economic slump. It has been 
said that this policy was an experiment unprecedented in the 
world's financial history. Though it was an emergency measure the 
government has unavoidably adopted, because economic stimulation 
measures by means of fiscal outlays were not in the cards, its 
after effects have been of concern. 
 
For instance, a near-zero interest rate means that borrowing 
money costs virtually nothing, and the burden of interest 
payments is only minimal. Under such a policy, companies in bad 
shape and heavily indebted companies tend to be preserved and 
protected. Banks tend to slacken their efforts to monitor 
borrowers' business management and urge them to become more 
efficient. The same holds true of the management of the state. 
The government can afford to leave its fiscal deficit unattended, 
taking advantage of the situation in which it can borrow money 
(issuing government bonds) at low interest rates. 
 
It has now become possible for the BOJ to shift from the near- 
zero-interest policy, which has such unsound elements, because 
the Japanese economy is about to emerge from its long-standing 
slump. What is to happen is the normalization of financial policy 
as a result of the recovery of the financial services sector. 
This may basically be a good thing. 
 
However, being long accustomed to the zero interest rate and the 
fall of the prices of such assets as stocks and real estate, the 
Japanese economy has had no opportunities to experience the works 
of financial functions. All economic entities must understand 
what the normalization of interest rate policy means and be 
prepared for it. The key phrase is the reestablishment of 
financial discipline. 
 
Banks still strapped with excessively competitive structure 
 
If the zero-interest rate policy is removed, the market will 
regain its function to discover appropriate prices. Should that 
occur, potential risks of business undertakings would be assessed 
and priced. Low interest rates will be set for business with high 
potential income and future prospects, and rather high interest 
rates would be imposed on risky projects, discounting potential 
risks. The financial system will thus display its original 
function of bringing about a favorable cycle for the efficient 
management of the economy. 
 
On the other hand, a rise in interest rates would increase the 
burden of economic entities with a large amount of debts. Medium 
to small-size businesses' ratio of borrowings to capital is twice 
as much as that of leading companies. The prices of government 
bonds, which banks hold in bulk, may fall, causing latent losses 
to them. 
 
The government's debts are extremely huge. They are twice as much 
as those held by British, German or US governments in ratio to 
gross domestic production (GDP). Raising interest rates would be 
hard now when the primary balance is in the red and the nation's 
debts are continuing to snowball. Both the government and medium 
 
TOKYO 00002662  013 OF 014 
 
 
to small-size businesses must speed up efforts to make their 
balance sheets sound and reestablish discipline. 
 
Some are expected to oppose the move to remove the zero-interest- 
rate policy, citing such reasons as that the burden of interest 
will become heavy for medium to small-size businesses, that the 
government's fiscal reconstruction process will become slow or 
that it will usher in a strong yen. 
 
However, if we ride on the currents of such an argument, it will 
mean that we have learned nothing from the past. To begin with, 
some have even pointed out that the delay in the raising of 
interest rates for fear of ushering in a strong yen caused the 
excessive liquidity that gave rise to the bubble economy in the 
1990s. 
 
It is not that higher interests rates are more favorable for the 
economy. how to steer financial policy and keep a good balance 
are always important. As the economy picks up, many projects are 
now about to be implemented. At such a time, there will appear a 
mountain of non-performing loans, if there is no financial 
discipline. 
 
As a matter of fact, Japan's banking sector is still strapped 
with excessively competitive structure, and efforts to set 
interest rates on a par with potential risks involved in business 
undertakings has made little progress. Cases of regional banks 
can be well imagined. Even a proposal has recently been made to 
inject public money into one of those banks. 
 
Risk of expansion without disciplines 
 
In order to normalize the financial services system, banks need 
to speed up their efforts to pay off the public money they have 
received. At present, leading banks still have to repay 6 
trillion yen. Unless this money is paid back to the state 
coffers, freedom of managing the economy would be constraint. 
Fortunately, it has been reported that mega banks are expected to 
complete repayments before the end of fiscal 2006. In 30 
prefectures out of 47, bank lending in the term ending March this 
year exceeded the previous year's level. Banks are thus receiving 
a boost, but they should not neglect efforts to reform their 
profit-making structure. 
 
The greatest challenge in reestablishing financial discipline is 
how to handle privatized postal services companies. The objective 
of postal savings was to correct the distorted cycle of state 
funds. Privatized postal services companies will be run by 
managers from the private sector, while the companies will 
continue to be protected by the government with their entire 
stocks held by it for the time being. It will take a decade 
before they are completely privatized. 
 
Differences between the public and private sectors are whether 
they can continue business without regard to profitability. 
Chances are high that as long as privatized postal services 
companies remain under government control and protection, they 
might act contrary to rational economic activities. For instance, 
they might excessively extend loans to highly risky businesses. 
What would happen, if Japan's private banks were involved in such 
competition? The financial services industry is struggling to 
emerge from the non-performing loan problem. An expansion of the 
privatized postal services companies without discipline at such a 
 
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time would pose a major risk to the Japanese economy. 
 
DONOVAN