VZCZCXRO9056
PP RUEHFK RUEHKSO RUEHNAG RUEHNH
DE RUEHKO #2740/01 1380818
ZNR UUUUU ZZH
P 180818Z MAY 06
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC PRIORITY 2223
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 8898
RUEHFK/AMCONSUL FUKUOKA 6270
RUEHOK/AMCONSUL OSAKA KOBE 9488
RUEHNAG/AMCONSUL NAGOYA 6231
RUEHKSO/AMCONSUL SAPPORO 7432
RUEHBJ/AMEMBASSY BEIJING 2335
RUEHUL/AMEMBASSY SEOUL 8511
RUCNDT/USMISSION USUN NEW YORK 0324

UNCLAS SECTION 01 OF 08 TOKYO 002740 
 
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 05/18/06 
 
 
INDEX: 
 
(1) Fukuda winds up US visit, solidifying his foundation for post- 
Koizumi race; Popularity growing owing to silence 
 
(2) American eyes carefully watching LDP presidential election 
campaign 
 
(3) Why the accompanying press was miffed at Yasuo Fukuda during 
his rare trip to the United States 
 
(4) US not pinning high hopes on former South Korean President 
Kim Dae Jung's Pyongyang visit; Still skeptical about Seoul's 
reconciliation strategy toward North Korea 
 
(5) Government to expand investment in oil development due to 
high prices 
 
(6) METI greatly shaken 
 
ARTICLES: 
 
(1) Fukuda winds up US visit, solidifying his foundation for post- 
Koizumi race; Popularity growing owing to silence 
 
MAINICHI (Page 5) (Abridged) 
May 18, 2006 
 
Ryuko Tadokoro, Washington 
 
Upon winding up his weeklong trip to the United States, former 
Chief Cabinet Secretary Yasuo Fukuda of the Liberal Democratic 
Party will return home today. Fukuda, who appears to be putting 
high priority on Asia policy, met energetically with key players 
in the Bush administration, such as Vice President Dick Cheney, 
and congressional members to demonstrate his stance of attaching 
importance to relations with the US as well. Fukuda, who has been 
closing the gap with Chief Cabinet Secretary Shinzo Abe in recent 
opinion polls on the post-Koizumi race, impressed US leaders as a 
promising contender. 
 
During his stay in the United States, Fukuda held talks with over 
50 individuals, including Secretary of State Condoleezza Rice, 
Secretary of Defense Ronald Rumsfeld, and congressional and think- 
 
SIPDIS 
tank members. Although the contents of those talks and the 
timetable were not disclosed in detail, Fukuda reportedly 
highlighted the need to improve relations with China when 
conversation moved to the subject of China, such as the strained 
relations between Tokyo and Beijing and China's military buildup. 
Former Ambassador to Japan Howard Baker also gave Fukuda a warm 
reception at his home, suggesting that he played an important 
role in arranging Fukuda's meeting with US leaders. 
 
Fukuda's support ratings are also on the rise. The Mainichi 
Shimbun's May 13-14 survey showed an increase of 2 points from 
the previous poll, in which his popularity had surged. Polls by 
four other news companies also showed increases of 7 to 10 points 
for Fukuda. In stark contrast, Abe's support rating dropped 12 
points in one survey. Although Abe is still the favorite over 
Fukuda, the projected race among four hopefuls -- Taro Aso, 
Sadakazu Tanigaki, Yasuo Fukuda, and Shinzo Abe -- has 
fundamentally changed. 
 
 
TOKYO 00002740  002 OF 008 
 
 
A ruling party member described Fukuda's popularity this way: "He 
has been doing well while keeping silent. He has been selling 
himself as an expert on diplomacy who can handle not only East 
Asia but also relations with the US." One cabinet minister also 
said, "Mr. Fukuda's popularity has been growing because he has 
been quiet." His view is that although Fukuda has yet to announce 
his candidacy clearly, his steady diplomatic efforts have made 
those unhappy with Prime Minister Koizumi's Asia policy view him 
as the ideal replacement. 
 
Fukuda's strategy of determining his chances to run in the race 
with a watchful eye on public opinion has been successful. But 
many think Fukuda is still undetermined and could say, "I never 
said I would run in the race." 
 
Support ratings for Abe and Fukuda 
 
                                Shinzo Abe       Yasuo Fukuda 
Mainichi Shimbun             38%  (+2 from            20%   (+2) 
                                  previous survey) 
Yomiuri Shimbun              40%  (-4)                23%  (+10) 
Nihon Keizai Shimbun         33%  (-7)                21%   (+7) 
Kyodo News Service           40%  (-12)               31%   (+9) 
NHK                          30%  (no change)         16%   (+7) 
 
(2) American eyes carefully watching LDP presidential election 
campaign 
 
SHUKAN SHINCHO (Page 36) (Full) 
May 25, 2006 
 
The LDP presidential election is looking more and more like 
becoming a close race between two rivals in the same Mori 
faction, with former Chief Cabinet Secretary Yasuo Fukuda gaining 
rapidly in the polls on Chief Cabinet Secretary Shinzo Abe. Even 
in his recent visit to America, Fukuda was able to meet in rapid 
succession with a number of influential members of the Bush 
administration. Although his treatment was sharply noticed by the 
press, it was not at all that unusual a case. Said one Washington- 
based special correspondent: "Although Fukuda met with Secretary 
of State Rice, Defense Secretary Rumsfeld, and Vice President 
Cheney, among others, when Abe and Finance Minister Tanigaki 
visited Washington, they received the same treatment. Of course, 
there was the calculation that Fukuda perhaps might become the 
next prime minister, but it was only protocol to receive such 
treatment as a politician who once had held an important post in 
the government of Japan, an important US ally. It was not an act 
worthy of special mention." 
 
However, there are needless to say close links between politics 
in Japan and the US. How do these high officials see the LDP 
presidential race? One Washington think-tank source said: "Of 
course, if the party were different, their thinking would be 
different. But the tone is quite different since he is from the 
same party. However, for the Bush administration, which still has 
two and a half years left in office, there is a desire to 
continue the honeymoon-like relationship that has existed until 
now. In that sense, Abe, who has the support of Koizumi, is a 
better candidate for the administration." 
 
Another important factor for Washington is the candidate's sense 
of distance from China. The same source continued: "In the 
current administration, there are officials like Deputy Secretary 
 
TOKYO 00002740  003 OF 008 
 
 
of State Zoellick who are pro-China types, but basically, the 
government, like its ally Japan, thinks of China at the 
crossroads of becoming a military threat. Therefore, on that 
point, they give high marks to Abe. Since Mr. Fukuda is 
conciliatory toward China, they have some qualms about him." 
 
Recently, it was reported that House of Representatives Chairman 
of the Foreign Relations Committee Hyde (Republican) had written 
a letter to the Speaker of the House complaining about Prime 
Minister Koizumi's paying homage at Yasukuni Shrine, but that 
does not seem to be much to worry about. The special 
correspondent cited above stated: "Among one of Hyde's aides is a 
staffer who lived a long time in South Korea and is critical of 
Japan's having once annexed Korea. Last fall, too, Hyde sent the 
same kind of letter to Japanese Ambassador to the US Ryozo Kato, 
and the contents were then leaked to the South Korean media. 
Although some segments of the Japanese media picked up the 
report, most treated it as something having been generated by a 
certain "usual suspect." 
 
This time, only the Asahi wrote up the story. 
 
(3) Why the accompanying press was miffed at Yasuo Fukuda during 
his rare trip to the United States 
 
SHUKAN BUNSHUN (Page 25) (Abridged) 
May 25, 2006 
 
In an opinion poll carried out by Kyodo News on May 13-14, Chief 
Cabinet Secretary Shinzo Abe was the top pick with 40.1% of 
respondents when asked who they thought was "appropriate to be 
the next prime minister." Former Chief Cabinet Secretary Yasuo 
Fukuda was next with 31.4%. But only a month ago, there had been 
a 30-point spread between the two potential prime ministerial 
candidates, indicating that Fukuda is in hot pursuit of the 
overwhelming favorite Abe. 
 
Fukuda arrived in the United States for his visit on May 10. His 
selling point was not just his Asia policy, He also seemed to 
want to show that he has good connections in America, as well, 
with meetings set up with such senior Bush administration 
officials as Secretary of State Rice, Vice President Cheney, and 
Defense Secretary Rumsfeld. 
 
One political correspondent pointed out: "Since he does not now 
have a cabinet portfolio, it is quite unusual to be able meet 
such illustrious figures. Naturally, I would have liked to find 
out a bit of what they had talked about, but Mr. Fukuda's 
treatment of us locally was atrocious, so I don't know at all the 
contents." 
 
To learn the details, let us go back to the starting point. The 
same source revealed: "At the time of his departure, he sent us a 
message through his son Tatsuo, who is his private secretary, 
that this time, he was not going to provide us with a schedule of 
meetings and other events. After he arrived in the US, he met 
with Secretary of State Rice from 4:00 pm at the State 
Department, but he asked the press corps not to follow him 
around, and he said he would provide no briefing." 
 
We in the press then wondered why then were we accompanying him 
anyway, as we all stood outside the State Department waiting for 
him to come out, said the same source. Fukuda emerged, 
 
TOKYO 00002740  004 OF 008 
 
 
accompanied by Ambassador to the US Ryozo Kato and former US 
Ambassador to Japan Baker, but he walked right by the press corps 
without a glance. Ambassador Baker, who is knowledgeable about 
Japan, was pressed to say something, so he stood before the blur 
of cameras to respond. But he would only repeatedly say, "You 
have lots of questions, but it was only a courtesy call and they 
just chatted about various subjects." 
 
The next day, Fukuda met Vice President Cheney and Defense 
Secretary Rumsfeld. The same source continued: "That day, too, 
 
SIPDIS 
the comment was the same as the previous day's. When Ambassador 
Baker emerged from the Pentagon, the television and camera crews 
approached him, but this met with a protest from private 
secretary Tatsuo in an exchange that lasted a good 30 minutes. 
 
SIPDIS 
After that, Tatsuo sent word to the press, as if he wanted to say 
something to them, that time would be made available in the 
evening. But by eight o'clock that night when he still had not 
contacted them, we realized that we had been stood up." 
 
Finally, on the 13th, Fukuda responded to a round-table with the 
press, but on condition that it be completely off record and that 
no articles be written. What the press corps had wanted to ask 
him about was his round of meetings and about the remark by 
former Prime Minister Mori's about not being able to unify the 
faction around one candidate, Abe or Fukuda, and what his 
reaction was to that. His answers to both queries were curt. 
 
A reporter on the political desk said: "It is inconceivable that 
his conversations with such an array of senior officials were 
just idle chatter. Since the taxpayers' money was being used, 
with Ambassador Kato accompanying him, to say that he did not 
talk about anything in particular only makes fools of the 
Japanese people. Fukuda may feel that the press only came along 
with him for the heck of it." 
 
Is it all right for such a politician to become prime minister? 
 
(4) US not pinning high hopes on former South Korean President 
Kim Dae Jung's Pyongyang visit; Still skeptical about Seoul's 
reconciliation strategy toward North Korea 
 
YOMIURI (Page 6) (Full) 
May 18, 2006 
 
Washington, Takashi Sakamoto 
 
Washington intends to carefully watch whether former South Korean 
President Kim Dae Jung's decision to visit Pyongyang again will 
lead to North Korea's return to the six-party talks. The US 
government has recently come up with a policy of applying 
pressure on North Korea by such means as cracking down on its 
wrongdoings and the human rights issue. As such, even if Kim's 
visit prompts North Korea to shift to a flexible stance, the US 
is unlikely to change its hard-line approach. 
 
Regarding Kim's decision to visit Pyongyang, a spokesperson for 
the Department of State noted, "We support dialogue between the 
South and the North and reconciliation on the Korean Peninsula." 
 
Assistant Secretary of State Christopher Hill, the chief US 
delegate to the six-party talks, will visit South Korea in late 
May to coordinate views with the goal of restarting the talks. 
The Bush administration, which attaches importance to applying 
 
TOKYO 00002740  005 OF 008 
 
 
pressure on North Korea, is still skeptical about the Roh Moo- 
hyun administration's policy, which advocates giving the North 
favors in return for coming back to the framework. A US 
government official made an ironic comment: "There is no concern 
at all over US-South Korea relations deteriorating any further, 
because they can only get better." There is little chance the US 
is pinning its hopes on a Pyongyang visit by Kim, who essentially 
created South Korea's current policy toward the North. 
 
The US government has stressed that if the North comes back to 
the six-party talks, it would restart the talks as soon as 
tomorrow, as Hill put it. The US has urged the North to 
unconditionally come back to the negotiating table. Even if the 
talks restart, the US has no intention of rewarding Pyongyang by 
providing economic assistance or normalizing ties. 
 
Secretary of State Rice on May 15 announced the US decision to 
 
SIPDIS 
restore full diplomatic ties with Libya and remove it from a list 
of state sponsors of terrorism, signaling incentives for North 
Korea if it follow suit. Abandoning its nuclear development 
program is the precondition needed for it to follow the Libya 
model. 
 
The US government has already imposed financial sanctions against 
banks in Macau, which the North used to launder money. The US is 
strengthening pressure on the North on the human rights area, as 
well. As part of such efforts, it has started accepting North 
Korean defectors. President Bush also met with the mother of 
abductee Megumi Yokota. 
 
Focus is on progress on abduction issue 
 
Hajime Izumi, professor at Shizuoka University 
 
Attention is being paid to how various issues will unfold after 
Kim's visit to Pyongyang, including the working-level talks under 
the six-party talks scheduled for later in the month, the 
abduction issue in South Korea, and the issue of South Korean 
prisoners that have been kept since the Korean War. 
 
The G-8 Summit to be held in Russia in July will likely discuss 
Japan's abduction issue. Should that occur, Pyongyang will need 
to respond. The North might think that if there is any progress 
on the abduction issue involving South Korea, it could dampen the 
momentum of Japan and the US, which are determined to settle the 
issue through pressure. 
 
Unlike Japan and the US, South Korea hopes to settle the 
abduction issue through economic assistance. Progress in efforts 
to settle the abduction issue is also advantageous to it. South 
Korea is increasingly alert to China, which is increasing its 
influence on Pyongyang through economic assistance. If any 
progress can be achieved regarding the abduction issue, Seoul can 
justify itself in extending assistance to Pyongyang with its 
construction of infrastructure as a measure to counter China. 
 
In this sense, I would not be surprised if Kim's Pyongyang visit 
prompts discussions on the confirmation of the whereabouts of 
alleged South Korean abductees, the first step in settling South 
Korea's abduction issue. Kim will not visit Pyongyang in the 
capacity of special government envoy, but his visit is apparently 
directly linked to progress in North-South relations. 
 
 
TOKYO 00002740  006 OF 008 
 
 
(5) Government to expand investment in oil development due to 
high prices 
 
NIHON KEIZAI (Page 1) (Full) 
May 17, 2006 
 
The government will boost aid for Japanese firms to independently 
develop oil and gas fields. Japan will reinstate its independent 
development goal, which was ended in 2000, and will increase the 
rate of independently developed oil to imports from the current 
15% to 40% by 2030. As specific support measures, the government 
will increase public funds to be offered to private development 
firms and expand debt guarantees. By introducing such measures 
for private oil developers, the government aims to secure a 
stable supply of oil. 
 
The Research Commission of Comprehensive Resources and Energy in 
the Economy, Trade, and Industry Ministry will finalize its draft 
report tomorrow specifying this policy switch and also 
incorporate it in its report on a new national energy strategy 
due out by the end of this month. The new policy will also be 
reflected in the Basic Policies for Economic and Fiscal 
Management for June. 
 
The government had set the goal of raising the rate of 
independent development to 30% since the 1960s, but it withdrew 
that goal in 2000 in response to the declining significance of 
independent development due to the spreading view that oil would 
always be available on the market. Amid heated global competition 
for oil given surging prices to the level of around 70 dollars 
per barrel, however, the government has judged that it should 
commit itself to ensuring a stable supply of oil. 
 
A key measure is to expand investment by Japan Oil, Gas, and 
Metals National Corporation (JOGMEC), which has taken over the 
business of the defunct Japan National Oil Corporation (JNOC). 
When a project to exploit gas or oil is carried out, it is common 
for oil companies or trading houses to provide funds and 
establish a development firm capitalized at billions to ten of 
billions of yen. The government will study a measure to raise the 
maximum rate of investment in such development firms from the 
current 50% to 70%. 
 
A development company needs a 100-billion-yen-level plant fund to 
start full-scale production. To help developers borrow money from 
banks, the government intends to raise the maximum debt-guarantee 
percentage from the current 50%. To secure financial resources to 
cover such disbursements, the government plans to trim 
unnecessary projects when the special accounts for oil and power 
development are integrated in fiscal 2007. 
 
As a result of the Japan National Oil Corporation investing in or 
offering loans for unprofitable projects, the corporation had an 
accumulated debt of over 700 billion yen. Reflecting on this, 
JOGMEC will offer aid only for projects whose rate of return is 
over 10%. An audit group composed of experts will select eligible 
projects, and a system to check profits every year will also be 
established. 
 
(6) METI greatly shaken 
 
BUNGEISHUNJU (Pp. 235-236) (Abridged slightly) 
June 2006 
 
TOKYO 00002740  007 OF 008 
 
 
 
The Liberal Democratic Party suffered an expected defeat in the 
April 23 Lower House Chiba by-election, which was a proxy battle 
between Prime Minister Junichiro Koizumi and Minshuto (Democratic 
Party of Japan) President Ichiro Ozawa. The Ministry of Economy, 
Trade and Industry (METI) was badly shaken by the outcome, 
including Administrative Vice-Minister Hideji Sugiyama (who 
joined METI's predecessor, Ministry of International Trade and 
Industry (MITI), in 1971). 
 
METI officials had been optimistic that the LDP's publicly 
recruited candidate Ken Saito, a former METI official who once 
held the position of vice governor of Saitama Prefecture, would 
easily defeat the 26-year old Minshuto candidate Miwa Ota, a 
former Chiba prefectural assembly member. 
 
The election upset explains the rage felt by METI Minister 
Toshihiro Nikai, who reportedly was influential in picking Saito 
from among 200 applicants as the LDP candidate. Vice Minister 
Sugiyama and other senior ministry officials may punish 
Minister's Secretariat Assistant Vice-Minister Kazuo Matsunaga 
(1974), who served as a coordinator for the Chiba race. 
 
It has been traditional since the MITI period that when retired 
or incumbent officials run in national elections, eight METI 
regional bureau chiefs establish a ministry-wide support system 
centering around the assistant vice-minister of the Ministers' 
Secretariat. In the case of the Chiba by-election, Matsunaga and 
 
SIPDIS 
Kanto Bureau chief Takehide Takahashi (1976) assumed that 
responsibility. Their failure infuriated METI Minister Nikai. 
 
METI's support system reportedly did not work because of strong 
factional rivalry between alumni of Komaba High School -- a 
school attached to the former Tokyo University of Education that 
is now the University of Tsukuba -- and alumni of Azabu High 
School. 
 
Rivalry between the two groups has been rampant since the MITI 
days across the board, including personnel affairs. Saito is a 
graduate of Komaba, whereas Matsunaga and Takahashi are from 
Azabu. Traditional enmity between the two academic cliques worked 
against Saito. 
 
Nikai, who has close ties to the Kansai Electric Power Co., 
thinks Matsunaga treated the power industry coldly when he was 
director general of the Nuclear and Industrial Safety Agency. For 
this reason, it was certain that Nikai would sack Matsunaga this 
summer, regardless of the outcome of the Chiba poll. 
 
What is the lineup of the Komaba faction look like? There are 
many promising members who are close to Saito in age, such as 
Economic and Industrial Policy Bureau Economic Analysis Office 
Director Kazuaki Hasegawa (1982), Industrial Finance Division 
Director Masakazu Ichikawa (1983), Regional Economic and 
Industrial Policy Division Director Kensuke Yamamoto (1981), and 
Trade and Economic Cooperation Bureau Trade Finance and Economic 
Cooperation Division Director Hitoshi Ito (1982). 
 
But they did not throw their total support behind Saito. The 
reason was probably because Saito, who was eager to enter 
politics all along, once briefly leaned toward Minshuto 
(Democratic Party of Japan). 
 
 
TOKYO 00002740  008 OF 008 
 
 
Saito's lonely battle brought about unexpected consequences. 
 
SCHIEFFER